UK Unemployment Falls Inline With Forecast Trend Expectations
Economics / UK Economy Jul 14, 2010 - 08:21 AM GMTBy: Nadeem_Walayat
The previous Labour government's debt fuelled election bounce continues to have a positive impact on the UK economy as the number of unemployed for May fell to 2.47 million down by 34,000 in the three months to May. However whilst the ConLIb government may try and claim some credit from Labours lagging unemployment news, the headline figure masks several problem areas such as the rise in the long-term unemployed up by over 60,000 to 787,000.
The previous Labour government bent over backwards to prevent unemployment soaring during the recession in the run up to the General Election which caught many academic economists out who had been penciling in a rate of as high as 3.4 million by now. Instead Labour measures of boosting the public sector employment, enabling distressed companies delaying tax payments and a more flexible workforce that cut hours and days worked instead of becoming unemployed resulted in a far shallower rise in UK unemployment that came in remarkably close to my trend forecast of October 2008 that forecast a rise in UK unemployment to 2.5 - 2.6 million by April 2010.
UK Unemployment Forecast 2010-15
The ongoing downtrend in the headline unemployment figures is inline with the current trend forecast (01 Jul 2010 - UK Unemployment Forecast 2010 to 2015 ) for a dip into September 2010 which represents the calm before the storm to follow the implementation of the ConLib governments cuts of an estimated 500,000 public sector workers with an additional 500,000 private sector workers also destined to lose their jobs against which there is expected to be an increasing number of new business start up's employment. The job market remains tough for the unemployed with plenty of slack remaining in the economy as those forced to become part timers will be first in the queue during the economic recovery to regain full time employment rather than existing firms employing new workers. To illustrate this the number of part timers hit a record of 7.82 million.
On a positive development the number of those employed surged by 160,000. However as I explained in the UK unemployment forecast between 60% and 70% of new jobs will go to migrant workers, especially as workers from distressed euro zone PIGS such as Greece and Spain with soaring unemployment rates of over 20% will seek to gain employment in the far less distressed and more liberal UK jobs market. The figures show 160,000 jobs created against an unemployment drop of 34,000 points to a ratio of 79% which is precisely inline with the experience of the last Labour Government where 4 in 5 new jobs went to migrant workers.
Negative Average Earnings In Real Terms
The impact of the government's INFLATION stealth tax on workers and savers was further illustrated today as average wages increased by just 2.7% which is against CPI inflation of 3.2% and the more recognised inflation measure RPI at 5% which is implying a real terms cut in pay of 2.3%, with much worse to come as UK high inflation is expected to continue well into 2011 against low pay and for many people pay freezes continuing for several years therefore ensuring that the people of Britain will see their standards of living eroded by means of Inflation so as to finance government deficit reduction, total debt interest and the bailout of the banking sector.
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By Nadeem Walayat p[
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Nadeem Walayat has over 20 years experience of trading derivatives, portfolio management and analysing the financial markets, including one of few who both anticipated and Beat the 1987 Crash. Nadeem's forward looking analysis specialises on UK inflation, economy, interest rates and the housing market and he is the author of the NEW Inflation Mega-Trend ebook that can be downloaded for Free. Nadeem is the Editor of The Market Oracle, a FREE Daily Financial Markets Analysis & Forecasting online publication. We present in-depth analysis from over 500 experienced analysts on a range of views of the probable direction of the financial markets. Thus enabling our readers to arrive at an informed opinion on future market direction. http://www.marketoracle.co.uk
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