Because actually, it’s not quite as bad as all that. That 48,000 increase was half the number seen over the past few months, and the grand total is down slightly from a peak of 2.68m in the period between September-November. It’s far less than expected, too: economists had thought unemployment would rise to 8.5%. Not bad, all things considered.
But the pain isn’t over quite yet: to begin with, most economists expect unemployment to continue to rise over the next few months, peaking at somewhere between 2.8m and 2.9m. And looking at a breakdown of the figures, the number of people claiming jobseeker’s allowance, for instance, went up by 6,900 to 1.6m – that’s twice the rise economists had expected. And while the number of people in employment rose by 60,000 to 29.13m, that was largely driven by a huge upsurge in people either settling for part-time jobs or going self-employed because they couldn’t find full-time ones.
Worst for the Government is the geographical break-down: the worst-hit area was North-east England, where the unemployment rate was 11.2% (although admittedly that’s down 0.4 points on last quarter). What’s significant about that is that it’s one of the areas worst-hit by public sector cuts. Originally, the Government had been counting on the private sector to absorb those jobs – but clearly its plans haven’t been quite as effective as it had hoped.
The other bit of news is that wage growth (with or without bonuses) is still steady at 2%, unchanged from the previous quarter’s figures. In principle, that should mean lots of pressure on businesses to increase wages – but, as luck would have it, yesterday, the ONS said inflation dropped to 3.6% in January from 4.2% in December. Fingers crossed, then, that it continues to drop, thus easing taking the onus off businesses to pay out more. Which would be nice.