Europe South Asia Asia Pacific Americas Middle East Africa BBC Homepage World Service Education



Front Page

World

UK

UK Politics

Business

Sci/Tech

Health

Education

Sport

Entertainment

Talking Point

In Depth

On Air

Archive
Feedback
Low Graphics
Help

Wednesday, September 15, 1999 Published at 11:15 GMT 12:15 UK


Business: The Economy

Jobless rate plunges



Unemployment in the UK fell in August to the lowest level since March 1980.

The number of people out of work and claiming benefit fell by 22,300 to 1.2m, or 4.2% of the workforce.

It is the sixth month in a row that the jobless total has dropped. The Office for National Statistics says that unemployment is still on a downward trend.

The broader measure of unemployment, preferred by the government, the ILO rate, also fell to a new low of 5.9% for the three months to July, compared to 6.2% in the previous three months.

The ILO rate includes people who are not eligible for unemployment benefit but are looking for jobs.

Forecasters were surprised by the strength of the labour market.

Union and industry leaders are urging the Bank of England not to use the figures as another reason to raise interest rates.

TUC General Secretary John Monks said: "This is more good news on jobs and pay and no basis for any further increases in interest rates."

Average earnings

Economists and the stock market will be looking closely at the average earnings figures, which could indicate inflationary pressures.

Average earnings rose at an annual rate of 4.6% in July, compared to 4.4% in June. But the government said that the figure in June had been boosted by bonus payments.

Wages and salaries in the booming service sector are rising at around 5% a year, however, compared to only 3.4% for manufacturing.

The statistics on pay are closely watched by the Bank of England's Monetary Policy Committee and any sharp rise in earnings could herald further hikes in interest rates.

Neil Parker, senior economist at the Royal Bank of Scotland, said inflation fears should not be overplayed.

"You could see this as pointing to inflationary pressure rising and more rate rises, but we don't believe that is necessarily the case ...manufacturing employment fell by 154,000 in the three months to July. The Bank has got to look at that and at manufacturing unit wage costs, which rose by just 0.5%. That does not exactly suggest there is inflationary pressure."

But other economists were more concerned.

"The economy keeps generating loads of jobs, unemployment continues to fall and going forward you have to feel there is going to be upward pressure on earnings growth," said Deutsche Morgan Grenfell economist Ciaran Barr.

More people in work

Meanwhile, the total number of people with jobs has reached a new high.

The number of people in work in the UK rose to a record 27.4m in three months to July, 54,000 higher than the previous three months and almost 300,000 higher than the same period a year earlier.

Employment minister Andrew Smith said: "I strongly welcome the fact that more people than ever before are in jobs, with unemployment down yet again and still more vacancies becoming available.

"This vindicates the government's policies for jobs, the New Deal, and making work pay, and reflects progress in creating the right conditions for employment."



Advanced options | Search tips




Back to top | BBC News Home | BBC Homepage | ©


The Economy Contents


Relevant Stories

15 Sep 99 | Scotland
Unemployment falls to 23-year low

18 Aug 99 | The Economy
The 'new economy' - too good to be true?

11 Aug 99 | The Economy
Unemployment falls again





Internet Links


Office for National Statistics


The BBC is not responsible for the content of external internet sites.




In this section

Inquiry into energy provider loyalty

Brown considers IMF job

Chinese imports boost US trade gap

No longer Liffe as we know it

The growing threat of internet fraud

House passes US budget

Online share dealing triples

Rate fears as sales soar

Brown's bulging war-chest

Oil reaches nine-year high

UK unemployment falls again

Trade talks deadlocked

US inflation still subdued

Insolvent firms to get breathing space

Bank considered bigger rate rise

UK pay rising 'too fast'

Utilities face tough regulation

CBI's new chief named

US stocks hit highs after rate rise

US Fed raises rates

UK inflation creeps up

Row over the national shopping basket

Military airspace to be cut

TUC warns against following US

World growth accelerates

Union merger put in doubt

Japan's tentative economic recovery

EU fraud costs millions

CBI choice 'could wreck industrial relations'

WTO hails China deal

US business eyes Chinese market

Red tape task force

Websites and widgets

Guru predicts web surge

Malaysia's economy: The Sinatra Principle

Shell secures Iranian oil deal

Irish boom draws the Welsh

China deal to boost economy

US dream scenario continues

Japan's billion dollar spending spree