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Economy in Brief

UK Unemployment Steadies; Modest Employment Growth
by Carol Stone February 14, 2007

Employment in the UK rose 7,000 in the November period, a third successive monthly increase in this 3-month moving average. Over the last three months (the style of comparison that the UK's Office for National Statistics [ONS] generally emphasizes) employment went up by 50,000. The advances were more than accounted for among part-time workers, who increased 80,000 over three months ago, in contrast to a 30,000 decline in full-time workers.

The unemployment rate has held flat at 5.5% since September, and is 0.1% below its August reading. This resulted from an outright decrease in the number unemployed of 24,000 since August, helped by the increase in employment and also by a smaller gain in the number of people "in economic activity" (what the US calls the "labor force"), 26,000, than in the total population over age 16, 92,000. This cut the ratio of the labor force to the population from 63.7% in the August period to 63.6% in November.

The UK's alternative unemployment measure, the "claimant count", shows more unambiguous improvement, albeit modestly so; the number of claimants (similar to the US measure of the number of people receiving unemployment insurance) fell 9,300 in December and 13,500 in January. The resulting "claimant rate" was 2.9% in January, down from 3.0% for the previous 10 consecutive months. "Inflows" to this group have had a choppy, but trendless pattern in recent months, while the number of "outflows" has increased consistently over almost the past year, suggesting increased hiring of benefit recipients.

An increase in job vacancies in January hints that the recent hesitant but favorable labor market trend might continue. For January alone, vacancies were 637,700, up almost 35,000 from December. This put them at their highest level since the spring of 2005. The 3-month moving average rose slightly to 607,900, about even with last August and still well below the early-2005 amounts. So signs of improvement remain tentative, but the marginal adjustments in the labor market, new hires and vacancies, show a potential for further advance.

UK Labor Force Survey & Related Labor Data Jan 2007 Dec 2006 Nov 2006 Oct 2006 Year Ago 2006 2005 2004
Employment*
 
(3Mo Avg, SA, Thous)
-- -- 29,036 29,029 28,758 28,960 28,730 28,465
Chg from 1 & 3 Months Ago -- -- +7/50 +24/14 +23 (MoAvg)1% y/y 0.8% 0.9% 1.0%
Unemployment Rate*  
(3Mo Avg, SA, %)
-- -- 5.5% 5.5% 5.1% 5.4% 4.8% 4.8%
Claimant Count  
(Monthly, Thous)
925.8 939.3 948.6 956.5 905.1 944.1 861.8 853.5
Vacancies (Monthly, Thous) 637.7 602.8 590.7 619.1 598.8 599.4 618.6 631.9
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