Unemployment Rate Drops In The UK

The unemployment rate dropped in the UK between June and August to its lowest level in over a year, but the more opportune claimant count rate went up in September for the second month in a row, highlighting the future risks, data revealed on Wednesday.

The ILO unemployment figure dropped by 20,000 between June and August. Employment went up by 178,000 during the same period. The fall in ILO unemployment led to the total number of unemployed people equaling 24 million and a jobless rate of 7.7 percent, which is the lowest since May 2009. Economists were expecting it to be 7.8 percent.

The widely monitored claimant count unemployment measure went up by 5,300, leading to a jobless rate of 4.5 percent, according to the UK Office for National Statistics. This was the biggest increase since January.

An ONS spokesperson said the fall in ILO unemployment was due to a decline in unemployment amongst 16-17 years old and that this was likely because of them choosing education over employment, as the rate of inactivity, which includes education, rose by 30,000 for the same age group during this period.

The rise in claimant count rate is bad news for the economy, particularly at a time when the coalition government is set to conduct a comprehensive review of spending next week.

Two separate studies released earlier on Wednesday demonstrated the weakening unemployment outlook. Both Begbies Traynor Group and PriceWaterHouseCoopers said that companies in the private sector could be hard hit by large cuts in public sector spending. The government has outsourced most of its consultancy jobs and other contracts. This combined with a large drop in public sector spending can result in lower demand for private services.