More people in work as jobless tally falls by 7.7%

Guardian News and Media/London

The unemployment rate dropped to 7.7% in the three months to last November as the UK’s jobs market continued to improve in contrast to most of its European neighbours.

The Office for National Statistics said there were 2.49m people unemployed, down 37,000 on June to August 2012 and down 185,000 on a year earlier. It is the lowest since spring 2011.

A record number of people were also in work last year after a boost to full-time and part-time working. Almost 30mn adults were in a job in the quarter to last November, up by more than half a million on the previous year.

The figure, giving an employment rate of 71%, is the highest since records began in 1971.

But economists warned that the downturn in the manufacturing sector in the run up to Christmas and the bloodbath on the high street following the closure of several shop chains will reverse the trend in the coming months.

Labour market data is seen as a lagging indicator of the economy’s health and there are many predictions that unemployment will begin to rise this year after an 18-month run of declines.

Nevertheless, the Treasury will welcome the rise in private sector employment at a time when chancellor is calling for local and central government to make bigger sacrifices to cut budgets beyond the next election.

The fall in unemployment was coupled with an unexpected cut in the number of people claiming jobseeker’s allowance, which fell by 12,100 last month to 1.56mn, the lowest since June 2011.

Part-time employment fell by 23,000, but this was offset by a 113,000 increase in the numbers employed full-time in the three months to November.

The number of people classed as economically inactive, including those looking after a relative or who have given up looking for a job, fell by 13,000 to just over 9mn. Rob Carnell, UK economist at ING, described the prolonged fall in unemployment as “a miracle” ahead of a likely triple dip recession.

The first estimate for GDP in the final quarter of last year will be published tomorrow and is expected to show the economy contracted. Some economists are forecasting a fall of 0.4%.

Carnell said: “Weaker public finance data for December and further retail sector failures suggest that this strength could be challenged in the months ahead. But this has also been the pattern for the last six months or so, so future weakness should not be taken as read.

Moreover, criticism that the gains are all part-time seems entirely without merit. The self-employed also make little difference to this outcome, rising by 3,000, so it is full-time employment by firms, that has driven today’s result.”

However, Samuel Tombs, UK economist at Capital Economics, highlighted that pay growth remains weak, with the headline rate of average earnings growth excluding bonuses dipping from 1.7% to 1.4% in November, the lowest rate for two-and-a-half-years.

Debt collectors ‘push many to suicide’

Irresponsible lending and intimidating debt collectors are pushing thousands of people in Britain into depression and suicide, a report said yesterday and separate data showed more people are taking their own lives. Many people already struggling with the economic slowdown, wage freezes and benefit cuts were often overwhelmed by tactics used by some money lenders, including persistent phone calls and threatening letters, said the paper. “Debt clients frequently feel humiliated, disconnected and entrapped, with the process of debt collection having a clear impact on people’s mental health,” the report by researchers from the University of Brighton said. “The government must take urgent action to tackle the problem of irresponsible lending and intimidatory collection tactics which has left thousands of people trapped in a spiral of debt and at risk of depression and even suicide,” it said.