The Office for National Statistics said the number of people
claiming unemployment benefit fell by 3,700 in October confounding expectations
for a rise of 5,000. There was also a downward revision to September’s rise in
the claimant count — to 1,300 from the 5,300 initially reported.
The number without a job on the wider ILO measure, which
includes those looking for work but not claiming benefits, also declined,
falling by 9,000 in the three months to September to 2.448 million.
The pound rose after the figures, which were released at the
same time as minutes showed Bank of England policymakers split three ways at
their policy meeting earlier this month.
“A fairly positive tone on the labor report,” said Alan
Clarke, an economist at BNP Paribas. “It’s slightly better-than-expected news.”
The jobless rate remained steady at 7.7 percent, as
expected, matching its lowest rate since May 2009. Employment rose by 167,000
to 29.19 million, its highest total since February 2009.
While the figures suggest Britain’s labor market has recovered
somewhat from the soft patch experienced at the start of the summer, analysts
said painful government cuts could cause the jobless rate to rise in the coming
months.
Britain’s government will cut 490,000 public sector jobs
over the next four years as part of an austerity drive aimed at cutting a
record peacetime budget deficit.
Finance minister George Osborne is banking on the private
sector creating extra posts to help make up for the loss of state jobs.
“Major job losses are on the way in the public sector as the
government slashes spending, and we doubt that the private sector will be able
to fully compensate for this,” said Howard Archer, an economist at IHS Global
Insight.
Wage growth picked up from recent low levels but remained
below inflation. Consumer price inflation rose to 3.2 percent in September,
more than a percentage point above the Bank of England’s 2 percent target,
while retail price inflation is running even higher at 4.5 percent.
Average weekly earnings excluding bonuses rose an annual 2.2
percent in the three months to September, the fastest rate since the three
months to March 2009.
“With plenty of spare capacity and major public sector job
cuts to come, the labor market should be a strong source of downward pressure
on inflation over the coming quarters,” said Jonathan Loynes at Capital
Economics.
