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Financial News: UK Jobless Claims Rise At Record Pace

UK Jobless Claims Rise At Record Pace

05/19/2020 - 07:03:00 (RTTNews)

(RTTNews) - The UK jobless claims rose at a record pace in April as lockdown to contain the spread of coronavirus, or Covid-19, took its toll on labor market, data from the Office for National Statistics showed Tuesday.

The number of jobless claims increased by a record 856,500 to hit 2.096 million in April. The claimant count rate rose to a seasonally adjusted 5.8 percent from 3.5 percent a month ago.

The increase was limited by government's Coronavirus Job Retention Scheme, which is currently paying wages to about 7.5 million people.

According to the furlough scheme, the government will pay 80 percent of wages of workers put on temporary leave by employers. These furloughed workers are counted as employed.

Figures released by the HM Treasury later on Tuesday revealed that 8 million jobs were furloughed with GBP 11.1 billion claimed so far through the CJRS.

While claims data is not a perfect guide to unemployment, the over two million cumulative declarations over the past few weeks potentially points to an unemployment rate as high as 9 percent, which if it materialized, would be above the worst since the financial crisis, James Smith, an ING economist, said.

The ILO jobless rate came in at 3.9 percent in the three months to March, well below economists' forecast of 4.4 percent.

The ONS said the unemployment rate was 0.1 percentage points higher than a year earlier, and 0.1 percentage points higher than the previous quarter.

The number of unemployed increased by 50,000 from last year to 1.35 million in the three months to March.

At the same time, the employment rate reached a joint-record high of 76.6 percent, which was 0.6 percentage points higher than a year earlier.

The latest labor force survey estimates for the January to March period remained mostly unaffected by the impact of the coronavirus, the ONS said.

Data showed that average earnings, including bonus, grew 2.4 percent from last year, slower than the expected 2.6 percent. Excluding bonus, average earnings advanced 2.7 percent annually, slightly faster than the forecast of 2.6 percent.

In case of a three-month lockdown scenario, the Office for Budget Responsibility forecast the unemployment rate to reach 10.0 percent by the second quarter of 2020, before gradually easing to just below 6 percent by the end of 2021.

For February to April, there were an estimated 637,000 vacancies, down 170,000 from the previous quarter. This was the largest quarterly decrease to the vacancies total since the current time series started in 2001.

Another data from the ONS showed that labor productivity declined in the first quarter due to the impact of the government policy to restrict the coronavirus spread.

Output per hour decreased 1.1 percent sequentially, in contrast to a 0.3 percent rise in the fourth quarter. At the same time, the decline in output per worker deepened to 2.6 percent from 0.5 percent.

On a yearly basis, output per hour was down 0.4 percent and output per worker decreased 2.9 percent in the first quarter.

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