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Wednesday, 15 May, 2002, 09:04 GMT 10:04 UK
UK jobless total rises
Job centre
The number of benefit claimants had been expected to fall
The number of people out of work and claiming unemployment benefit in the UK rose last month, official figures have shown.

The Office for National Statistics (ONS) said the number of benefit claimants in April rose by 5,400 from March to a total of 953,000.

The rise in the claimant count wrong-footed predictions of a slight decrease, with most economists forecasting a fall of about 3,000.

The monthly increase - the second so far this year - suggests that the UK labour market is softening, raising questions over the strength of the economic recovery.

Underlying strength

However, the UK's minister for work Nick Brown said the jobs market remained fundamentally strong, with historically high numbers of people in employment.

"At a time when other countries have experienced greater difficulty, this demonstrates the resilience and hard-won stability of the British economy and labour market," he said in a statement.

The UK unemployment rate is still only slightly above a low last seen in 1976.

High rates of employment are critical to the UK's overall economic health, with consumer spending accounting for about two thirds of all economic activity.

The UK economy's capacity to keep on creating jobs during last year's downturn was a major factor in staving off a full-blown recession.

The unemployment rate by claimant count for April was unchanged from March at 3.2%, ONS said.

The International Labour Organisation unemployment rate - which includes those out of work but not claiming benefit - was 5.1%.

Wage pressures

Separate ONS data showed that average salaries were 4.4% higher last month compared with April 2001, in a sign that inflationary pressures are still present in the economy.

However, the increase came in below the 4.5% threshold which the Bank of England believes is the maximum level compatible with low inflation.

"The underlying message is that market conditions are still historically tight but that overall wage cost pressures remain contained," said Jeremy Hawkins, chief economist at the Bank of America.

Moderate wage growth makes it less likely that the Bank of England will raise interest rates from their current 37-year low of 4% at its next monthly meeting.

The Bank slashed borrowing costs by two percentage points in an attempt at warding off recession last year.

But most economists expect that with economic growth now showing signs of picking up, the next move in interest rates will be upwards.

The BBC's Evan Davis
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See also:

09 Apr 02 | Business
German unemployment falls
05 Apr 02 | Business
US unemployment rises
05 Mar 02 | Business
EU unemployment stabilises
01 Mar 02 | Business
London heading for slow recovery
13 Feb 02 | Business
UK unemployment falls
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