Although the latest official unemployment figures were better than expected, the UK is continuing its steady crawl towards jobless levels of 9% by the end of the year, experts warn.
According to the Office for National Statistics, worklessness rose by 48,000 in the three months to December, bringing the number of people without employment to 2.67 million or 8.4%, a rise of 0.1% on the previous quarter and the highest level in 17 years.
On the plus side, the ‘economic inactivity rate’ for those aged 16 to 64 was 23.1% or the equivalent of 9.29 million people, down from 23.3% in the three months to September. But the number of people claiming Jobseeker’s Allowance last month rose by 6,900 to 1.6 million or 5%.
John Philpott, chief economic adviser at the Chartered Institute of Personnel and Development, said that, while the figures were better than anticipated, closer analysis revealed that the UK labour market was “in the doldrums” at the end of last year, “neither contracting dramatically nor mounting anything approaching a decent recovery”.
Instead it appeared to be “experiencing a slow, painful contraction that will see unemployment crawl toward close to three million by the end of 2012, rather than a sudden surge of joblessness”, he added.
Although the rise in unemployment was relatively small – the smallest increase for seven consecutive months – and there was an increase in the number of part-time jobs available, most of the employment increase appeared to have occurred among ‘reluctant part-timers’ who were unable to secure full-time jobs or wages.
“There is little to suggest this situation will improve any time soon unless economic growth and labour demand greatly exceed most current forecasts,” Philpott said. “What the latest jobs data also suggest is that November was a particularly poor month for the labour market, which may reflect the influence of concern about the euro-area debt crisis on employer confidence.”
Rob Harbron, an economist at the Centre for Economics and Business Research, was equally downbeat. While the figures may provide some respite from steadily rising unemployment figures, things were expected to get worse over the year ahead, he said.
Figures from the Markit/CIPS Purchasing Manager’s Index suggested that private sector companies remained reluctant to hire, while various sub-indices had implied for some time that hiring would stagnate in sectors such as services, manufacturing and construction.
“The challenge facing consumer budgets and confidence over 2012 is likely to be rising unemployment, which is expected to hit 9% by the year’s end,” Harbron said.
