Page last updated at 09:17 GMT, Wednesday, 14 May 2008 10:17 UK

UK unemployment rises by 14,000

Slower economic growth has seen companies cutting back on staff

UK unemployment rose by 14,000 to 1.61 million in the three months to March, official figures show.

The number of people claiming Jobseeker's Allowance climbed by 7,200 to 806,300 last month, the Office for National Statistics (ONS) said.

Analysts warned the figures may indicate that global financial problems were hitting the UK and could impact the labour market in coming months.

The unemployment rate was unchanged at 5.2% in the three months to March.

The figures come amid signs that the UK economy is slowing. At the same time, inflation has picked up, driven by higher food and fuel costs.

"Jobless claims show the labour market is starting to weaken," said Chiara Corsa, an analyst with Unicredit.

"I do expect further deceleration in the pace of job creation as the economy has already started a below-trend journey."

The region where the unemployment rate was the highest was the North East, at 6.3%, followed by the North West. The South West had the lowest rate of unemployment at 3.6%.


The data also showed that total employment climbed by 117,000 to 29.5 million in the three months to March.

Average earnings rose by 4% in the year to March, given a boost by worker bonuses.

The wage data will highlight the challenge facing the Bank of England as it tries to boost economic growth, while also tackling rising costs.

"Earnings were higher than expected, but it's nothing to get too concerned about," said Alan Clarke of BNP Paribas.

Chief Economist at the Institute of Directors Graeme Leach

He added that the main message was "a softening in labour market conditions that we haven't seen until now".

On Tuesday, the ONS said UK consumer inflation reached its highest level in 13 months driven by high food and fuel costs.

"Given that the labour market is now loosening, we think that wage growth will remain well-contained in the coming months," said Nick Kounis, an economist at Fortis.

"As such we do not see the labour market as an important risk to inflation at this juncture, which is good news given that there are plenty of other inflationary headwinds facing the economy."

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