Page last updated at 09:29 GMT, Wednesday, 13 August 2008 10:29 UK

Jobless total up as economy slows

Ian McLeod from Bristol was made redundant in June 2008.

The number of people out of work rose by 60,000 in the three months to June, taking the official unemployment rate to 5.4%, official figures showed.

The Office for National Statistics (ONS) said unemployment increased to 1.67 million between April and June.

The data suggests that a slowing economy is taking its toll on the labour market.

The ONS also said the number of people claiming jobless benefits in July rose by 20,100 to 864,700.

This was sixth consecutive rise in the claimant count and the biggest jump since 1992.


George Buckley, an economist at Deutsche Bank, said the labour market was deteriorating at a rapid pace.

"I think it's going to continue to do so because of slower economic growth and concerns by companies that the downturn might actually be longer and more pronounced than they originally thought."

Average earnings in the three-month period grew at an annual pace of 3.4%, down from 3.8% in the previous period and the weakest rise since August 2003.

This could ease fears about soaring inflation, which stood at 4.4% in July, and lessen the likelihood of an interest rate rise to contain price rises.

"The good news is that reports such as this limit the risk of an interest rate hike and bring forward the likely timing of the first interest rate cut," said Alan Clarke, an economist at BNP Paribas.

On Tuesday, the ONS reported that consumer price inflation had reached 4.4% in August, more than twice the government's target figure, while retail price inflation, often used for setting wages and benefits, was 5%.

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