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Unemployment rate remains at 7.8%

POSTED: 16th August 2014
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Unemployment fell marginally in the three months ending June 2013, down by 4,000 to remain at 2.51 million, according to the latest official figures published on August 15th 2013 by the Office for National Statistics (ONS).

Unemployment fell marginally in the three months ending June 2013, down by 4,000 to remain at 2.51 million, according to the latest official figures published on August 15th 2013 by the Office for National Statistics (ONS).undefined

In the last 12 months unemployment has fallen by 49,000 and stands at 7.8 per cent. Last week, the Bank of England announced that it is to adopt a policy of forward guidance on interest rates which will be linked to the unemployment rate.

Mark Carney, the new governor of the central bank said that interest rates will not fall from the record low of 0.50 per cent until the unemployment rate drops to 7.0 per cent.

Economists predict that this will require the net creation of 750,000 jobs, which, if the economic recovery continues to gather pace, should happen in 2016.

When the unemployment rate does fall to 7 per cent, it will not trigger an automatic rise in interest rates, but will lead to a review of whether the base rate can go up after considering the position of the wider economy and whether inflation is under control and there is no threat to financial stability.

Unemployment has not risen as much as many economists had expected over the last three years as the economy attempts to rebalance itself.

There have been redundancies, particularly in the public sector, as well as high profile retail casualties such as HMV, Blockbuster and Jessops, but the consensus is that firms have tried to hold on to skilled workers and reduced overtime and hours in order not to make too many redundancies.

In doing so firms do not have to recruit when the upturn arrives and can use experienced and skilled staff to take advantage of the opportunities as the economy improves.

The latest figures do show a rise in the number of long-term unemployed and the number of 16-24-year-olds out of work or not in education went up by 15,000 to 973,000.

The total number of unemployed people is the same as it was at the end of December 2012, unchanged in six months at 2.51 million.

Howard Archer, Chief UK & European Economist at IHS Global Insight said: “This is a broadly encouraging set of data overall, indicating that the labour market is increasingly benefiting from markedly improved economic activity and strengthening business confidence.”

However, Stephen Gifford, CBI Director of Economics said: "While it's encouraging that fewer people are claiming Jobseeker's Allowance, it's simply too soon for recent promising GDP figures to start filtering through to the job market in any material way."

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