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Financial News: UK Unemployment Rises, Redundancies Highest Since 2009

UK Unemployment Rises, Redundancies Highest Since 2009

10/13/2020 - 05:37:00 (RTTNews)

(RTTNews) - The UK unemployment rate increased and redundancies reached its highest level since the global financial crisis in the three months to August even ahead of the scaling back of government's furlough scheme and the mounting fear of more restrictions.

The ILO jobless rate rose by 0.4 percentage points from the preceding quarter to 4.5 percent in the three months to August, the Office for National Statistics reported Tuesday. The rate was above economists' forecast of 4.3 percent.

Unemployment increased by 138,000 from the prior quarter to 1.52 million.

At the same time, the employment rate fell by 0.3 percentage points to 75.6 percent in three months to August. Employment totaled 32.59 million, which was 153,000 fewer than the previous quarter.

The ONS said there were also around 192,000 people away from work because of the pandemic and receiving no pay in June to August.

Redundancies increased by a record 114,000 sequentially to 227,000, which was the highest since mid 2009.

With the national furlough scheme closing at the end of this month and the new Covid-19 restrictions set to stall the economic recovery, a second bigger wave of unemployment is probably on its way, Paul Dales, an economist at Capital Economics, said.

That may lead to 1 million more people losing their jobs and the unemployment rate rising to almost 8 percent, the economist added.

James Smith, an ING economist said the unemployment rate is likely to rise towards 9-10 percent over the winter. This will put additional pressure on the Bank of England to add stimulus, and another round of QE is expected at the November meeting, he said.

Further, ONS data showed that average total pay including bonuses remained unchanged from the same period last year, while economists had forecast a 0.6 percent drop.

Excluding bonuses, average earnings grew 0.8 percent versus the expected growth of 0.6 percent.

In September, the claimant count rate rose to a seasonally adjusted 7.6 percent from 7.5 percent in August. The number of people claiming unemployment benefits increased by 28,100 from the previous month.

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