Jobless total breaks falling streak

The UK unemployment rate has broken a declining streak lasting almost two years, dashing hopes of the jobless total falling below the politically-sensitive one million mark by Christmas.

This will add to those who think the economy is slowing and the next move in interest rates is down

Trevor Williams, Lloyds TSB

The number of dole claimants rose by 3,500 to 1,047,300 in October, the Office for National Statistics said on Wednesday.

The increase, which Employment Minister Tessa Jowell blamed partly on the after effects of the fuel crisis, is the first since November 1998.

The rise dents hopes that, with the jobless total declining by an average of 19,000 a month until now, the number of workers claiming unemployment benefit would fall below one million by the end of 2000.

But, by reducing fears of wage inflation, it eases pressure on the Bank of England to raise interest rates.

'Lower interest rates'

"I was surprised that unemployment rose a bit," said Trevor Williams of Lloyds TSB. "This will add to those who think the economy is slowing and the next move in interest rates is down."

Regional jobless rates/figs (000s)

North East: 9.0% (108)

London: 7.0% (255)

Scot: 6.9% (176)

Wales: 6.5% (88)

Yorks/Humb: 6.1% (151)

West Mids: 5.8% (151)

N Ire: 5.8% (43)

North West: 5.4% (176)

East Mids: 4.8% (101)

South West: 4.0% (102)

East: 3.7% (105)

South East: 3.1% (130)

ILO method used

Economists have feared that, with unemployment still at among its lowest levels for 30 years, firms will be forced to increase wages to attract staff, so fuelling inflation.

Average earnings growth rose only a fraction to 4.1% in October, below the Bank's 4.5% danger point.

October's jobless total leaves the unemployment rate static at 3.6% of the workforce.

But according to statistical methods followed by the International Labour Organisation, which includes unemployed people not claiming benefit in its figures, the UK unemployment rate has continued to drop.

The total number of jobless workers was 36,000 lower at 1,586,000 over the three months to the end of September, according to ILO methods, which are seen as the EU standard.

This figure equates to 5.4% of the workforce.

Fewer women workers

The ONS also said that the total employment rate has continued to rise, with 74.7% of people of working age in a job, a figure half a point higher than a year ago.

But while the number of men in full-time jobs shot past the 14 million mark over the July to September period, the number of women in work fell 41,000 to 6.93 million compared with the quarter before.

Tessa Jowell, Employment Minister, calmed fears that October's rise in dole claimants heralds a long-term rise in unemployment.

"Too much significance should not be placed on a single month's figures," she said.

"This [rise] could be due to various things, including normal month-to-month variability, erratic patterns of employment, and unemployment created by young people going back into education at this time of year, and perhaps some lingering effects of the recent difficulties over fuel."

But Ian Fletcher, foreseeing lower interest rates, said the data could be a "turning point for the labour market".