12 December 2012 Last updated at 08:54 ET
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The number of people out of work fell by 82,000 between August and October, to 2.51 million, official figures have shown.
It was the biggest quarterly fall in unemployment since 2001.
The unemployment rate was 7.8%, down 0.2 percentage points from the previous three months.
The Office for National Statistics also said that the number of people claiming Jobseeker’s Allowance fell 3,000 to 1.58 million in November.
Total pay was up 1.8% compared with the same period last year.
Employment rose 40,000 to 29.6 million, which was the highest figure since records began in 1971.
“We see more people looking for work and actually finding work, so I think there’s a really strong labour market there,” Mark Hoban, minister for work and pensions, told the BBC.
“I think there’s more flexibility in the labour market, although this month we’ve seen a big increase in full-time jobs and no movement at all in the number of part-time jobs.”
David Cameron was challenged in the Commons over “stubbornly high” long-term unemployment
Employment in the public sector fell for the 12th consecutive month, dropping 24,000 to 5.7 million, which was outstripped by a 65,000 rise in private sector employment to 23.8 million.
“The main disappointment was the fact that despite the gains in employment, there is no pick-up in wage growth, which remains at 1.8%, year on year,” said James Knightley at ING.
“The fact that UK employment is rising, consumer confidence is up and anecdotal evidence of retail sales haven’t been too bad, offers some hope that the domestic situation in the UK is stabilising.”
Among the details in the ONS report:
- number in full-time employment rose 44,000
- number in part-time employment fell 4,000
- unemployed 16-to-24-year-olds fell 90,000 to 626,000, excluding people in full-time education
- the biggest regional fall in employment was in Scotland, where it fell 27,000
- the biggest regional rise was in Yorkshire and the Humber, where it rose 48,000
Leader of the opposition Ed Miliband said long-term unemployment was still “stubbornly high” and the problem was of “fundamental importance… to the country as a whole”.
Things seem to be getting better for young people looking for work. Or at least they are not getting worse. Alas, the same cannot be said for average earnings, which have actually now fallen even further behind inflation in October, with average annual growth of just 1.3%, less than half the rate of inflation.”
End Quote
Speaking at Prime Minister’s Questions, David Cameron said that while long-term youth unemployment was down 10,000, the problem showed the importance of the government’s Work Programme. However, “clearly, there is more to do,” he said.
Surprising strength
Many analysts have questioned why unemployment has not been higher, given the general weakness of the economy.
The flexibility of the workforce has been part of that, according to Ross Walker, UK economist at RBS, who points to the large numbers of part-time jobs in previous months, small rises in average wages and the increase in self-employment.
“None of that fully explains the gap – we would still have expected the labour market to have been rather weaker than it has been,” he said.
“Maybe actually, underlying growth is a little bit better than is being reported.”
BBC chief economics correspondent Hugh Pym said the Bank of England had admitted it did not understand why the labour market was so strong.
“They’re a bit worried about low productivity – in other words, more people in work, but not producing proportionally the amount that you would expect,” he said.
Shadow employment minister Liam Byrne: “We are absolutely not out of the woods yet”
“So is that a sign of a weak economy or an economy that’s got potential to grow in the future? They really don’t know.”
The Office for Budget Responsibility, which makes economic forecasts on behalf of the economy, last week cut its forecast for the peak rate of unemployment to 8.2%, although that still suggests a considerable increase in joblessness from the current 7.8%.
Shadow work and pensions minister Liam Byrne welcomed the fall in unemployment, but stressed that there was also bad news in the figures.
“Pay packets are under intense pressure as the pace of jobs growth slows down – wages are now growing at only half the rate of prices,” he told the BBC.
“Families are under real pressure right now and what today’s figures show is that the Department for Work and Pensions’ big back-to-work programmes are frankly delivering nothing.”
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Big decline in UK unemployment
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