Unemployment continues to rise and public sector takes the brunt

Unemployment continues to rise as figures out this morning show that at 8.3 per cent,it is now at its highest rate since 1994.

The Office for National Statistics said that the number of people out of work in the three months to October rose by 128,000 to 2.638 million, although those claiming new benefit appears to be levelling off.

Many economists had feared a much larger rise to 8.4 per cent.

Seperate figures from the ONS show that public sector employment dropped to its lowest level since September 2003 in the third quarter of 2011, falling by 67,000 to 5.987 million.

In the same period the increase in private sector jobs was barely 5,000.

Youth unemployment rose to 1.027 million, the highest since records began in 1992, beating the previous record set only last month.

Unemployment now at its highest since 1994

The latest unemployment figures have just been released this morning with the Total number of jobless hitting 17-year high of 2.6m.

Those people claiming the dole soared by 5,300 last month to 1.6m and youth unemployment has now breached the million mark.

8.3 per cent of the economically active population are now out of work in the UK.

The Office for National Statistics said the number of people without a job on the wider ILO measure grew by 129,000 in the three months to September to 2.62 million -- the highest level since July-September 1994.

The number of young people out of work ticked up to 1.016 million, rising above the politically sensitive 1 million mark for the first time since comparable records began in 1992 and taking the unemployment rate among eligible 16- to 24-year-olds to 21.9 percent.

Speaking to Sky News soon after the figures were announced,Employment Minister Chris Grayling put the figures in the context of the eurozone crisis:

He told Jeff Randle "Our economy now is growing as fast as any in Europe, growing by 0.5%. We have got a big challenge. The Governor of the Bank of England described these as the most dangerous economic times potentially of modern times and that is bound to have an impact on our economy."

He also said that the youth unemployment figure was misleading: "The true figure is just over 700,000 as we have just over 300,000 full time students who show up in the figures".

However Carmen Watson, Managing Director of Pertemps Recruitment Partnership, said,

We are in danger of seeing an entire generation of young people that is falling through the holes in the system designed to create employment. It may be too early to expect to see the results of the Government’s Work Programme, which was introduced earlier this year, but in the meantime, thousands more young people are becoming disaffected by the harsh and challenging conditions we’re seeing in the job market.

Ed Miliband MP, said during a visit to Liebherr Cranes in Sunderland today that:

This is a terrible day for Britain with the news that the number of young people who cannot find work has risen over one million.

"Instead of blaming everyone else and trying to find excuses in the eurozone, the Government should recognise that the British economy has been flatlining for a year - long before this recent crisis began.

The reasons behind youth unemployment

Over on the FT's blog today,Kiran Stacey tackles the question of why we have so such youth unemployment and what cab=n be done.

With figures on Wednesday likely to show unemployment among 16-24 year-olds is expected to top 1m people, its highest since records began in 1992,Kiran looks at the work of Prof John Van Reenen of the LSE’s Centre for Economic Performance who suggests a few possibilities.

1.Immigration and the question of whether young people's jobs have been taken especially by the influx from Eastern Europe to which he says no.

2.the fact that Labour shifted the emphisis of its new deal away from youth to single parents back in 2004 which may have been a reason for youth unemployment to start rising again.

3.The minimum wage was extended to cover 16-17 year olds but again he dismisses this

4.The fact that wages for qualified people have been rising too, more quickly in fact than those for relatively unskilled people. This would suggest there has been a boom in the demand for skilled workers, which might count against young people with less experience.

but most of all he claims there has been a shift in focus on the part of job centres from young people to lone parents and those claiming IB.

If that is the case, perhaps ministers should look a less at education and more at the benefits system for how to avoid creating a “lost generation”.

More pain for the UK Labour market

It is going to be a bad week for unemployment in the UK and more bad news this morning from The Chartered Institute of Personnel and Development (CIPD).

Their assessment of the The UK labour market is that it faces a "slow, painful contraction" with firms delaying recruitment of more staff.

They also predict that the jobs market would worsen in the medium term amid global economic "turmoil"

Its quarterly survey of 1,000 employers found firms' future hiring plans dwarfed by likely public sector losses.It found employers adopting a "wait and see" policy towards the economy.This involved reduced recruitment as well as fewer redundancies.

The number of UK employers planning to outsource work overseas or hire migrant workers had also fallen substantially in the last three months, the survey found.The CIPD said the employment situation could worsen if the eurozone crisis thrust the world back into recession.

Source BBC News

Jobless figures set to rise as the election looms

After yesterday's letter from 20 economists which the Chancellor robustly attacked earlier on the Today programme comes more bad news on the economic front.

The Chartered Institute of Personnel and Development (CIPD)are forecasting that just as the election campaign gears up,dole queues will increase to 2.8 million.

I think that it is safe to say that we have been spared the worst forecasts of unemployment made at the start of the financial crisis,but as many economists will tel you,unemployment will lag behind economic performance.

The forecast says that at least a quarter of firms are still planning to shed positions.

John Philpott, chief economic adviser at the CIPD, said: "The UK jobs market is still on the ropes, with a public sector fall in employment now a reality as it feels the impact of the longest recession in modern times. Despite the jobs market proving resilient in recent months, this represents a mere pause for breath with the number of redundancies easing in the private sector and spending cuts yet to be felt by large swathes of the public sector.

Unemployment-lets not get too excited yet

Yesterday's fall in unemployment is being herladed in some quarters as the repudiation of the governmemt's handling of the economic crisis.

Make no mistake,the headline figures are a lot better than all analysts predicted 12 months ago saving the government as much as £2b according to some estimates.

However we should get too complacent.As James Moore reminds us in the Indy this morning

the country still has a growing army of eight million "economically inactive" people, with the size of the labour market declining to 28.92 million. The rate of employment is now at its lowest level since the winter of 1996-97.

Despite the number of people out of work falling 7,000 to 2.458 million in the three months to November, and the claimant count dropped by 15,200 to 1.61 million,there are warnings that the rate is set to rise during 2010.

Furthermore the figures show that more people than ever before are working part-time and are trying to find full-time employment thus massaging the figures to a certain extent

We are not at the bottom yet

If you thought that the recession was going away think again.

Martin Wolff reports on the work of two economic historians, Barry Eichengreen of the University of California at Berkeley and Kevin O’Rourke of Trinity College, Dublin,who are tracking this recession with the 1930's depression

The bad news is that this recession fully matches the early part of the Great Depression. The good news is that the worst can still be averted.

They found that

1.global industrial output tracks the decline in industrial output during the Great Depression horrifyingly closely. and

2.the collapse in the volume of world trade has been far worse than during the first year of the Great Depression.

This morning's unemployment news, though not unexpected,sees jobless figures hitting a new high.They have increased by 232,000 to 2.26 million in the three months to April.

More worrying is the trend in youth unemployment which is at its worst level since 1994 after a 74,000 increase in the number of 18 to 24-year-olds out of work to 695,000.

Unemployment clears 2m

Ahead of the budget then comes the latest unemployment figures with those out of work now reaching 2.1m and 177,000 added to the list between Dec and Feb.

The percentage figure is up to 6.7 per cent of the workforce although the rise in those claiming was smaller than forecast.

More worring figures were the fall in earnings which at 0.1% was the lowest level since 1991.

We are now at the highest rate of unemployment since the months befoe Labour took office in 1997.

Other headlines.

1.Long-term unemployment rose by 49,000 to 481,000 in the three months to February,

2.Unemployment among 18 to 24-year-olds was 631,000 in the latest quarter, up by 17,000

Drastic action required to control unemployment

On the subject of unemployment which eveeryone is talking about at the moment,there is a paper out by David Bell and David Blanchflower(Ht-Mumbling and Stumbling) which considers some questions on the policy surrounding how to tackle it.

They make a number of proposals to contain the growing figures and conclude that unemployment will continue to rise about 100,000 per month for most of 2009 and will not peak until next year.

Amongst their solutions

1.that the government understakes a massive fiscal stimulus aiming at job creation as soon as possible

2.to provide large tax cuts aimed at helping the low paid get back into work

3.to increase the school leaving age to 18 immediatly

4.to provide futrher encouragment for the 18-24 to stay in further education

5.to exapand on capital projects to create what it calls direct jobs

6.to provide incentives for short time working and jobs haring

US job figures - a fundemental shift in the economy

Yesterday's US unemployment figures were dreadful.

An article in thsi morning's New York Times suggests that they may be merely the start of a reconstrction in the US economy.

For those who missed the Feb figures,651,000 people joined the list that represents around 8.1% of the working population and it is the highest level in 25 years.

The paper reports that John E. Silvia, chief economist at Wachovia in Charlotte, N.C says that the jobs wont return

A lot of production either isn’t going to happen at all, or it’s going to happen somewhere other than the United States. There are going to be fewer stores, fewer factories, fewer financial services operations. Firms are making strategic decisions that they don’t want to be in their businesses.”

Ok this has happened before in recessions but never across such a mix of industries.It has effected services as much as it has effected manufacturing.

The question for the Obama administration is what replaces these industries?

Foriegn worker statistics more to the release than meets the eye

This morning's Times led with the release by the Office for National Statistics of figures that suggest that

the number of foreign workers increased by 175,000 to 2.4 million last year while the number of British workers fell by 234,000 to 27 million.

The government was reportedly not happy with the actions of Karen Dunnell which couldn't have come at a worst time as once again protests about foriegn workers begin

Mike Smithson sees something going wrong

To me what makes this interesting is not the jobs story but that what used to be the all-powerful Number 10 spin operation had no idea of what was coming and that the Office of National Statistics is operating independently without reference to ministers.

he writes and adds that

Isn’t this also a measure of the decline of Labour’s power? Whitehall has a strong sense that the game is up and bodies like the UK Statistics Authority can launch moves without fear.

What will be the consequences for 3 million on the dole queue?

What will be the consequences for 3 million on the dole queue?

I do not believe that people have grasped the seriousness of the situation and it is almost as though we have been in an air bubble waiting for Christmas and pretending that 2009 will go away.

It is 16 years since the country was last plunged in recession, many people have only been employed in good times, and they have seen wages, property process and standards of living rise and were told that this would continue indefinitely.

The consequence is that we have become accustomed to a life style where work was everything and brought seemingly limitless rewards.

Now that the tap has been turned off what will be the consequences. Quite simply I believe that many people will not be able to cope with a change of lifestyle.

Unlike previous downturns this is going to affect the white collar worker, those involved in the financial sector and the service industries. Those employed in these sectors have been the drivers of the economy. That in itself will be a major consequence.

Michael White writing on the Guardian blog reminds us that

The traumatic shakeout of the 80s was concentrated in the industrial regions, mostly Scotland, Wales, northern England and the Midlands, in communities with fewer adaptable skills and few alternative sources of employment.

I’m not suggesting that we will see rioting on the streets aka the Greek model but it is difficult to predict what will happen to people who have known nothing but prosperity in their working careers.

Brother can you spare a dime?

The latest employment figures from the United States make grim reading.

Over half a million people lost their jobs in Nov and unemployment is at its highest rate since the days of Richard Nixon.6.7% of people are now on the dole and Nov was the 11th successive month that the figures have risen.

In the last six months over one and a half million peple have lost their jobs in the States.

The New York Times reports

“We have gone from recession into something that looks more like collapse,” said Ian Shepherdson, chief domestic economist at High Frequency Economics, referring to the accelerating job losses in recent months.

More worryng is that 70% of the losses came in the retail hotel and restaurant sectors.

The news that the world's largest economy is plummeting into recession pushed oil prices to a new low,prices are 70% down from the July peak

US employment figures

Confirmation that the American economy is slipping into a deep slump today with the news that 240,000 jobs vanished in October meaning unemployment is at a 14 year high across the Atlantic.

Unemployment now stands at 6.5% and has been rising now for 10 consecutive months.

It was hardly the best news for the President elect who was due to meet with his advisers and discuss the economic picture.The figures merely confirm the major problems that Obama will inherit come 20th January.

According to the Washington Post

Manufacturing lost 90,000 jobs, part of a steady decline in U.S. factory employment, while construction shed 49,000 jobs. The retail sector lost 38,000 jobs, with high gas prices, stagnant wages and general concern about the economy leading consumers to scale back spending. Professional and business service companies dropped 45,000 positions.

Thia from Richard Dekaser, chief economist at National City Corp

We have entered the phase of serious recession conditions. Unfortunately we will encounter more of this going forward. This is going to increase the urgency for another stimulus package to staunch the slide. Stimulus spending like (we had) early this year was not very effective. Infrastructure spending does not work quickly. Waiving the tax on jobless benefits is a fabulous idea because the money saved will be 100% spent.

2 million out of work but how much room for manoeuvre does the Bank of England have?

This morning brings more bad news on the economic front on the front page of the papers.The Independent going with the grim prediction from the monetary committee's David Blanchflower
who says that if base rates don't come then we could be looking at 2m on the dole by Christmas.

"People have to start to respond to the fact that we are in a recession and the danger is we'll be in a very serious and long-lasting recession unless we do something. This is a call to action." reports the paper.

Yet its room for manoeuvre may be limited.Most predictions see inflation falling next year which will give the Bank Of England some leeway.But there is another area that needs to be addressed and that is our falling exchange rate against both the Dollar and the Euro.

The weakness comes from the financial communities lack of confidence in the British economy but conversely it is also allowing for a fall in interest rates which means that its returns on sterling will fall.However the double whammy in all this is that the exchange rate will lead to higher inflation as it increases the cost of imported goods.This figure is currently running at over 8% and may well prevent a lowering of rates.

Whatever the outcome,the picture looks gloomy.Yesterday's report on falling house prices suggest that this may be more than the mere correction in the market that many analysts thought was needed.The figures on new mortgages,barely a quarter of what they were last year will lead to job losses not only in construction but also in financial services and estate agents.Both of these have supported the economy during boom times

More bad news on the economy as unemployment starts to move

On the back of yesterday's inflation figures comes unexpected bad news on employment today.

Many commentators had almost rejoiced at the fact that unemployment had not yet represented the general doom and gloom in the economy but the rise of 60,000 over the three month period to June shows that now it is catching up.That takes the figures to 5.4% and the biggest jump since 1992.Total unemployment now stands at 1.67m

The number of vacancies also fell in the period down 47,000 to 634,000,although the number of people in work has actually rise bu 20,000 in the same period

The Bank of England meanwhile have slashed its forecasts on growth in the economy.It is forecasting 0.1% increase in the first quarter of next year having previously put the figure at 1% and warns that inflation may hit 5% in the next few months

According to BBC online

Governor Mervyn King explained that the near-term outlook for inflation has "deteriorated since May", due to the fall in energy prices. But he stressed that there are still inflation risks from wage growth, forcing the Bank's monetary policy committee to continue treading a balancing line between the rising cost of living and falling economic growth.

"It may still just be summer but there is a feeling of chill in the economic air. The British economy is going through a difficult and painful adjustment due to higher energy and commodity prices and in banking, credit and housing markets. This adjustment to our economy cannot be avoided and as a result, inflation is rising and growth is slowing," King said.