Tuesday, February 23, 2010

Unemployment: Missed that one...

Last week, I guess while I was en route back to the UK, I missed the latest unemployment numbers being released for the UK economy: Claimant count up, total unemployment slightly down.

A bit like the previous month's numbers (a fall in both), the change in the unemployment rate (which remember is a survey carried out by the International Labour Organisation, part of the UN) is miniscule - but that in itself is not a bad thing: It means unemployment is not rising!

The claimant count though has risen, but that again is not surprising: People will have ended temporary contracts after the New Year as shops return to normal activity after the Christmas period. I'm slightly concerned about the analysts that expected a fall in the claimant count - who are these people?!

Furthermore, historically unemployment lags after GDP growth in a recovery, as firms first seek to expand activity using slack with their current staff rather than taking the risk of hiring more people. We should expect unemployment falls to come later, if the recovery is prolonged.

A concern is a changing nature of the composition of unemployment noted in the article: More long-term unemployed. A lot of old industries have bitten the dust in the last year or two, such as shipbuilding in the North of England and Scotland, and car manufacturing in the West Midlands, which probably contributes to this. So altogether mixed news on unemployment...

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