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Reference – Bloomberg

U.K. jobless claims fell more than economists forecast in May and a wider measure of unemployment also declined, providing further evidence that an economic recovery is under way.

Jobless claims fell 8,600 to 1.51 million, leaving the rate at 4.5 percent, the Office for National Statistics said today in London. Joblessness as measured by International Labour Organisation methods fell 5,000 in the three months through April to 2.51 million, a rate of 7.8 percent. Employment rose 24,000.

Recent data show the economy is gathering momentum after a return to growth in the first quarter, and surveys suggest companies plan to recruit staff in the coming months. Still, the labor market may be slow to respond after proving resilient last year as Britain struggled to avoid another recession.

“The jobs market appears to be moderately improving,” said Peter Dixon, an economist at Commerzbank AG in London. “We may see a pickup in output without a further increase in employment. Employment might show a lag to any increase in output.”

Pay growth accelerated to 1.3 percent in the three months through April from 0.6 percent. Some of the increase may be explained by delayed bonus payments as highly paid workers sought to take advantage of a cut in the top income-tax rate to 45 percent from 50 percent that took effect in April. Basic pay growth was 0.9 percent versus 0.8 percent in the previous period.

The outlook for jobs remains “firmly positive,” with construction set to emerge from the recession that has gripped the sector for the past five years, a Manpower survey this week showed.

Still, the economy faces headwinds from recession in the euro area, Britain’s biggest export market, and government austerity at home. In addition, companies that curbed costs during the recession by cutting wages rather than firing workers may want to see productivity improve before adding staff.

The claimant count has fallen for seven straight months. In April, it fell 11,800 instead of the 7,300 drop initially reported.

Public sector employment fell 22,000 in the first quarter to 5.7 million, the lowest since December 2001. Private sector employment rose 46,000 to 24.1 million.

 

 

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