UK headline average earnings dip in 3 mths to March; claimant count falls again

UK headline average earnings dip in 3 mths to March; claimant count falls again

	Published : Wed, 16 May 2007 09:54 By : Agencies Print this Story

LONDON (Thomson Financial) - Lower bonus payments in the financial services sector caused headline average earnings growth to drop in the three months to March, while unemployment as measured by the claimant count fell for the seventh month in a row in April, official figures showed.

The Office for National Statistics said average earnings growth including bonuses fell to 4.5 pct in the three months to March from the year earlier, after February's 4.6 pct rise.

Wage growth is well below analysts' expectations for an increase to 4.8 pct and may come as a slight relief to Bank of England rate-setters who have repeatedly expressed concern about rising inflationary pressures in the economy feeding through into pay settlements.

Earnings growth fell back slightly as bonus payments in the financial sector were lower in March than they were in February, an ONS official said.

Nevertheless, wage growth remains around the level that the Bank of England considers can stoke inflationary pressures in the wider economy.

If the bonus element is stripped out, however, earnings growth remains subdued.

Earnings growth excluding bonuses was 3.7 pct in the three months to March, up from 3.6 pct in the three months to February and slightly above forecasts for an unchanged reading.

Elsewhere, the figures also showed a substantial fall in the claimant count measure of unemployment, although the wider ILO measure rose.

The number of Britons claiming the jobseeker's allowance in April dropped by 15,700 in April, a far bigger fall than the 5,000 fall anticipated by analysts and the biggest fall since January this year.

This takes the total claimant count level to 890,000, its lowest level since October 2005.

To add to this, the fall in the claimant count during March was also revised down to a fall of 14,300 from the previously announced drop of 9,200.

The claimant count has now fallen for seven consecutive months. This is the first time since the seven months to February 2005 that the claimant count has fallen for this many months in a row and may stoke further concerns on the Monetary Policy Committee that there is very little slack in the economy.

Compared with a year ago, the claimant count is down 51,700 in April.

Moreover, the claimant count rate unexpectedly fell to 2.8 pct in April from 2.9 pct in March, against forecasts for an unchanged reading. This is the lowest level since November 2005.

The wider ILO measure of unemployment, however, showed a rise during the three months to March of 13,000 on the previous three months and of 101,000 on the year.

The ILO unemployment rate stood at 5.5 pct in the three months to March, unchanged from the three months to February and in line with expectations.

On employment levels, the ONS said the employment rate was 74.3 pct in the three months to March, unchanged from the three months to February.

Total employment over the three months fell by 55,000 from the previous three months to 28.98 mln, but was up 93,000 on a year earlier.

Meanwhile, the figures showed the manufacturing sector continued to shed jobs, losing 49,000 employees over the three months to March from a year earlier to 2.96 mln, the lowest figure since comparable records began in 1978.

Manufacturing productivity rose by 3.6 pct in the three months to March from a year earlier while unit wage costs fell by 0.2 pct.

jessica.mortimer@thomson.com

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