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London - Record public sector job losses pushed up
unemployment at its fastest pace in two years in the three months to July, and
the number claiming jobless benefits rose for the sixth straight month in
August.
The official numbers add to pressure on the government to do
more to boost growth as budget cuts that have helped keep it out of trouble on
debt hurt thousands of households.
Claimant count unemployment rose by 20 300 last month - a
smaller rise than July's 33 700 increase and below forecasts for a jump of 35
000, but continuing a rising trend since February.
The dip below forecast initially prompted some gains for the
sterling, but the broadly negative numbers brought it back to trade flat
compared to before the data.
On the wider International Labour Organisation measure, which includes people who are
looking for work, the number of people without a job rose by 80 000 in the
three months to July to 2.510 million, the biggest quarterly rise since August
2009. The jobless rate came in as forecast at 7.9%.
The number of people in employment also fell by 69 000 in
the three months to July, the biggest drop since March 2010.
The data show the impact of cuts to reduce a record budget
deficit is starting to kick in in earnest; they also add to the case for the
Bank of England to do more to stimulate a flagging economy as turbulence in
main trading partners threatens to tip the nation back into recession.
Deputy Prime Minister Nick Clegg is expected to say later on Wednesday that the economic environment has worsened "dramatically" but
that the government is looking at ways to boost growth while it presses ahead
with its austerity plans.
Analysts said they expected unemployment to keep rising.
"Overall, this is a worrying jobs report, which indicates that the economy's persistent weakness - lower business confidence and public sector job cuts - are now feeding through to take a significant toll on jobs," said Howard Archer, economist at IHS Global Insight.
"This intensifies pressure on the bank to undertake
further quantitative easing to try and boost the economy," he said.
Public sector jobs tumble
The Office for National Statistics said the jobless rise and drop in employment were
partly driven by the biggest fall in the public sector workforce since records
began more than a decade ago.
Public sector employment tumbled by 111 000 between April
and June to 6.037 million; less than 10% of this decline was due to temporary
workers for the 2011 census finishing their contracts.
Even though the economy has barely grown since last
September, chancellor George Osborne has rejected all calls to soften his
austerity drive, and is pinning his hopes on a private sector pick-up to fill
the gap left by public cuts.
But recent data suggest firms are struggling and are
reluctant to take on new staff. Indeed, a breakdown of Wednesday's data showed
private sector employment rose by just 41 000 between April and June.
Consumers have already cut back on spending as higher taxes,
soaring prices and low wage rises eat into their budgets.
Retailers have been suffering as a result, though two of the
country's biggest chains, Next and John Lewis, predicted a pick-up in the
economy next year.
Next, the No 2 fashion retailer, said it anticipated some
recovery by the second quarter of 2012 as inflationary pressures moderate.
John Lewis, which owns department stores as well as the
Waitrose supermarket chain, said it expected next year to be "slightly
better" as inflation eases.
Meanwhile pay growth remains muted, with average weekly
earnings excluding bonuses rising by 2.1% in the three months to July, down
from 2.3% in the previous three months.
