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Wednesday, 17 July, 2002, 08:53 GMT 09:53 UK
UK jobless rate shows surprise rise
UK unemployment has shown a surprise rise, as factory lay-offs saw the manufacturing workforce decline to a record low.

The number of Britons claiming unemployment benefit rose 1,300 in June to 952,400.

As calculated by the measures used by the International Labour Organisation ( ILO) - which includes everyone looking for work - the figure rose by 52,000 to 1,572,000 between March and May.

This is the first time the two calculation measures have increased at the same time since the end of last year.

Factory lay-offs

The rise in the jobless total was blamed largely on job losses in manufacturing, with 176,000 posts cut, mainly in electrical, optical and textiles firms, in the March to May period,

The total number of workers employed by UK manufacturers broke below the 4 million mark to a record low of 3,696,000.

But the economy as a whole employed a record 28.5 million people.

This figure reflected the rising UK population, the ONS said.

And Nick Brown, Minister for Work, said: "After a pause in job growth at the end of last year, employment is again growing steadily.

"In addition, vacancies remain at historically high levels."

Mr Brown attributed the high ILO unemployment figure to "more people joining the labour market".

Wage rises

The rise in unemployment surprised City analysts, who had been expecting the series of recent falls in the jobless total to continue.

But the increase was seen as insufficiently large to raise concerns over the health of the economy, with economists also relaxed over a rise of 3.8% in average earnings in the year to May.

This increase still comes in below the 4.5% threshold which the Bank of England believes is the maximum level compatible with low inflation.

Investec's chief economist Philip Shaw said: "Claimant count is basically flat, earnings growth is no threat to inflation and below the BoE's 4.5% threshold."

With figures on Tuesday also showing weak inflation, the Bank was set to leave interest rates on hold "for the foreseeable future", Mr Shaw added.

Will the UK economy feel the impact of the US slowdown?

Economic indicators

Analysis

UK rate decisions
See also:

09 Apr 02 | Business
16 Jul 02 | Business
17 Jul 02 | Business
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