Today’s official unemployment figures were even more gruesome than expected: the number of people out of work in the UK jumped to 2.38m in the three months to May, equivalent to 7.6% of the workforce. This amounts to a rise of 281,000, the biggest quarterly increase since records began in 1971. It’s hardly a surprise to hear that unemployment is still headed in the wrong direction, but nobody expected the numbers to be quite this grim. And with higher unemployment likely to equal lower spending, it doesn’t bode well for the UK’s chances of a speedy recovery...
Certainly the bad news keeps on coming: this morning Jaguar Land Rover, the UK’s largest automotive employer, said it was cutting 300 jobs at its Halewood plant in Merseyside. Reeling from a 30% drop in retail sales this year, Jaguar will be offering a raft of voluntary redundancies and then shutting down the entire plant for three weeks as it discontinues production of the X-Type. As CEO David Smith told MT a few months back, Jaguar got staff to agree to a pay freeze and shorter hours earlier this year in return for protection against further job losses. Looks as though this hasn’t worked.
Today’s figures reveal that the overall unemployment rate now stands at 7.6% - the highest since Labour came to power, and 2.4% higher than it was this time last year. And there’s almost certainly worse to come: most analysts expect the jobless count to rise above the 3m mark at some point next year, which would take the rate to almost 10%.
The only surprising statistic was that the number of people claiming unemployment benefit increased by 23,800, to 1.56m. This might sound like a lot, but it’s actually the smallest jump for over a year – the City had been expecting a rise of over 40,000. So it appears that not of all of those joining the ranks of the unemployed are being forced to live off the state, which at least lessens the burden on the public purse.
But generally speaking the news was almost uniformly grim. Vacancies are down; the number of long-term unemployed is rising; wages are growing at the slowest rate on record. And perhaps most worrying is the news that young people seem to be suffering the most: the jobless rate for 18-24 year-olds already stands at an alarming 17.3%, and that’s likely to jump as the latest raft of school and university leavers swell the jobseeker ranks. Some analysts argue that flexible labour terms and disincentives to offer early retirement are preventing the creation of junior roles. Either way, it's creating a serious long-term problem for the UK economy.
So none too cheery. At least in 1971 they had tunes like 'Imagine' and 'Brown Sugar' to take their minds off things...
In today's bulletin:
Biggest jump in unemployment since records began
Goldman in new bonus row as profits soar to $3.4bn
Sunshine puts fizz in Britvic sales - but melts Thorntons' hopes
Editor's blog: Goldman Sachs and moral revulsion
No more shock treatment for Chinese web addicts