Labour market falters in first quarter

24-08-2006

Unemployment levels rose in the first quarter of 2006 while growth in average earnings slowed, it has been revealed.

Figures released today by the Office of National Statistics (ONS) give a gloomy prognosis of the labour market, which appears to be struggling in the face of ailing manufacturing and retail sectors.

The overall unemployment rate rose by 0.2 per cent to 5.3 per cent over the quarter, representing a year-on-year rise of 0.6 per cent. Despite this the total number of employed rose to a record high of 28.94 million people.

"While the headlines will probably focus on claimant count unemployment rising to its highest level since April 2002, there was also a very healthy jump in employment," Howard Archer of research firm Global Insight commented.

"Nevertheless, the higher unemployment levels should help to keep a lid on earnings growth."

Despite the number of people claiming the Jobseekers' allowance benefit rising in the first quarter, independent analysts have responded by predicting an improvement to the labour market in the second.

An employment outlook survey published yesterday by Manpower claimed that prospects are slowly improving as the UK's GDP edges towards an accelerated rate of growth this coming autumn.

The Manpower survey found that in eight out of nine sectors employers planned to increase their recruitment levels, with only the agriculture sector registering no change.

It concluded that despite a poor first quarter performance, both employers and employees had good reason to be "generally optimistic" for the forthcoming months.


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