UK unemployment rate falls to 4.8% but claimant count jumps – as it happened

Graeme Wearden (until 12.35) and Nick Fletcher

from on 2016-11-16 17:39 (#21SP4)

Britain's jobless rate has dropped to a new 11-year low, but the number of people receiving unemployment benefit has risen by almost 10,000

5.39pm GMT

With Wall Street falling back after several days of rises, investors were pausing for breath a week after Donald Trump's shock victory in the US election.

The mixed picture from the UK employment data - jobless rate down, claimant count up - added to the uncertainty. But the pound held firm against the euro although it edged lower against a resurgent dollar. The US currency was boosted by the growing belief that the Federal Reserve is almost certain to raise interest rates next month, as well as the continuing expectation of a Trump spending boom. Chris Beauchamp, chief market analyst at IG, said:

The mood across most equity markets remains subdued, with modest losses being posted. Investors are evidently still cautious about the new [American] administration, with the steady drip of news relating to appointments and the like keeping the market in check. About the only thing still surging is the US dollar.

5.11pm GMT

Ahead of Italy's referendum next month, there is some unwelcome analysis from S&P, which paints a fairly uninspiring picture of the prospects for the country's economy. It said:

The Italian economy is likely to achieve only slow growth of less than 1% of GDP per year over 2016-2018, say S&P Global Ratings economists in a report published today ("Only A Modest Recovery In Sight For Italy").

"We don't expect the Italian economy to return to its pre-crisis output peak before the middle of the next decade because productivity remains very depressed. Italy is the only European country not to have recorded any productivity gains since 2000," said Jean-Michel Six, Chief Economist for EMEA at S&P Global Ratings.

3.48pm GMT

Oil prices continue to be volatile, coming under pressure after more evidence of growing stockpiles but then recovering.

After the American Petroleum Institute reported a higher than expected stock build last week, comes a similar tale from the US Energy Information Administration.

3.12pm GMT

US president Barack Obama might be pushing for debt relief for Greece, but unsurprisingly Germany disagrees (which should make Obama's upcoming meeting with Angela Merkel interesting). Reuters reports:

Germany on Wednesday opposed calls for debt relief for Greece after U.S. President Barack Obama offered support for such a mechanism for the recession-hit euro zone state during a trip to Athens.

German Finance Minister Wolfgang Schiuble said late on Tuesday granting Greece debt relief would do it a disservice.

Athens signed up to a third economic bailout package of up to 86 billion euros last year but wants long-term debt restructuring to exit its crisis.

Germany, which has long said there is no immediate need for debt relief for Greece as it would discourage much-needed structural reforms, said it noted the comments from Obama, who flies to Berlin later on Wednesday.

2.44pm GMT

The prospect of higher US interest rates has brought an end to the rally which has seen leading US shares hit new heights.

After rising for seven straight trading sessions in the run up and aftermath of Donald Trump's shock US presidential election victory, the Dow Jones Industrial Average is currently down 55 points or 0.3%. The S&P 500 opened down 0.25% while Nasdaq was 0.4% lower.

2.41pm GMT

The same sterling weakness that was made worse by the Bank Rate cut and QE of Jon Cunliffe #BoE #OpenMouthOperations https://t.co/V1lp1t9sqt

2.26pm GMT

Back with the UK, and the Bank of England's Jon Cunliffe has said recent currency movements had made setting interest rates move difficult. Reuters reports:

Sterling's sharp fall since Britain voted to leave the European Union has made it harder to set monetary policy, BoE Deputy Governor Jon Cunliffe said on Wednesday.

Cunliffe said he fully backed the central bank's neutral stance regarding its next move in interest rates, as announced earlier this month, and its latest quarterly set of forecasts which see a modest slowdown next year.

2.21pm GMT

US industrial production figures have come in slightly worse than expected.

It was unchanged in October compared to forecasts of a 0.2% increase. The September figure was revised down from a 0.1% rise to a 0.2% fall.

#UnitedStates Industrial Production month-on-month at 0.0% https://t.co/if5ZbL1j2Y pic.twitter.com/UdJ8Ll5Hba

2.03pm GMT

On his final day in Greece, US president Barack Obama repeated his belief that debt relief was vital for the country. The Athens News Agency - Macedonian Press Agency reports:

Speaking at the Stavros Niarchos Foundation on Wednesday, U.S. President Barack Obama once again highlighted the need for Greece's creditors to agree to debt relief, in accordance with the advice of the International Monetary Fund (IMF), noting that the country, and especially its young people, needed to see hope and a future.

"The IMF has said that debt relief will be crucial to get Greece back to growth. They are right. It is important because if reforms here are to be sustained, people here need to see hope and they need to see progress."

Obama giving his farewell speech lauding the virtues of #democracy in Athens 2day pic.twitter.com/bqyTgHU3G3

Obama at the Acropolis pic.twitter.com/KTwsMuRIGH

At one point in his Acropolis tour, Pres Obama was heard to ask his guide "So, how is this all financed?" The response was not heard. pic.twitter.com/iGXM6Jly6o

Obama tours the Acropolis Museum in Athens pic.twitter.com/4lSJckXs7S

Back to reality. #Obama leaves for Berlin. #obama_athens pic.twitter.com/sUwCYDKW04

1.53pm GMT

Here's IHS Markit on the UK employment data:

#UK #unemployment rate falls to 11-year low, but uncertainty about the future continues to restrain hiring https://t.co/dA2yCG5BU3 pic.twitter.com/vbE0lCEHUO

1.48pm GMT

Over in Europe, and the latest on the draft budgets put forward by member states. Reuters reports:

Italy and five other countries are at risk of breaking European Union budget discipline rules with their 2017 draft budgets, the European Commission said in a statement on Wednesday.

The five other countries are Belgium, Cyprus, Lithuania, Slovenia and Finland.

1.14pm GMT

The pound's renewed dip came after an early gain in the immediate aftermath of the UK unemployment figures. Chris Saint, Senior Analyst at Hargreaves Lansdown Currency Service, said:

Sterling has drifted lower against the euro and US dollar during European trading hours this morning, finding itself back around the a1.16 and US$1.24 levels by midday. There was some tentative support for the pound after today's UK labour market figures, but the gains were short-lived...On the face of it the headline numbers suggest the jobs market has remained buoyant in the first few months since the EU referendum, although the data probably does little to alter the Bank of England's future policy path at this stage as pay growth is still relatively contained.

12.57pm GMT

The stronger dollar has helped send the oil price lower, after a surge in crude on Tuesday.

Talk of an informal meeting on Friday in Doha between oil producers to prepare plans for an output agreement later this month had sent crude soaring around 5% on Tuesday.

12.52pm GMT

The dollar continues to strengthen as the odds of a US interest rate rise next month continue to shorten.

Federal Reserve board member James Bullard is the latest to back an increase, saying that unless there are any major shocks, rates will be hiked. Given how the market has reacted to Donald Trump's unexpected victory in the US election, it is hard to know what major shock would upset the market at this point.

The strength in the dollar index does represent a risk for the emerging markets and it can also eat into corporate profit for the US firms. The current move is also massively backed by bets that the Fed is going to raise the interest rate and odds are standing at 94%. It is important to keep in mind that come in December, it is the tone of the Fed for the future trajectory of the interest rate hike which is going to impact the dollar.

12.43pm GMT

And here's our economics editor Larry Elliott's take on the figures:

All things considered, the government will be happy with how the labour market performed in the first three months after the EU referendum.

Unemployment has continued to fall and at 4.8% of the workforce is at its lowest level for 11 years. Employment has continued to rise and there are plenty of jobs to be had. Ministers would not have expected anything better than that in the turbulent post-Brexit weeks and would have feared a much worse outcome.

12.41pm GMT

Here's our report on the UK jobs data. Phillip Inman writes:

Unemployment dropped to its lowest level in 11 years in September in a further indication that Britain's employers have largely shrugged off the June Brexit vote.

In the first health check of the labour market covering the three months since the referendum, official figures show the unemployment rate was 4.8%, the lowest since September 2005 and down from 4.9% in August and 5.3% a year earlier.

12.31pm GMT

12.07pm GMT

Over in parliament, Theresa May has hailed today's unemployment figures, at Prime Minister's Questions.

May argues:

The unemployment figures show the strength of the fundamental of our economy

The employment rate has never been higher, and the unemployment rate is at its lowest in a decade.

11.53am GMT

Several economists are concerned that British pay packets will be gnawed by inflation next year.

Today's labour market report shows that total pay rose by 2.3% over the last year, unchanged on a month earlier. That's more than inflation, which fell to 0.9% in October.

"Annual pay growth remained at 2.3% on a three-month average basis, suggesting that workers are in a weak position to offset what is likely to be a sizeable rise in inflation over the next year.

Indeed, the capacity of employers to pay more will not be supported by continued weak productivity growth. Overall, prospects of the labour market taking a turn for the worse in the not-too distant future are looking more likely."

"Real pay growth is the slowest it's been since early 2015. Wages are not growing fast enough to withstand the rise in inflation expected next year.

Without swift action from the government, working people could soon by paying the price for Brexit with another fall in living standards.

11.23am GMT

The jobless rate in Wales has inched up to 4.4%, from 4.3% a month ago, due to a 3,000 increase in unemployment.

"Year on year, Wales has outperformed the rest of the UK when it comes to improvements in employment, unemployment and economic inactivity.

"Unemployment in Wales, at 4.4%, is lower than in England, Scotland or Northern Ireland and remains well below the UK average. Meanwhile the employment rate remains close to its record high, with 41,000 more people in work across Wales than at this same time last year. Unemployment amongst 18 to 24 year-olds in Wales is down 9.1% on the year and there are also 19,000 fewer people economically inactive than a year ago.

11.07am GMT

Professor Geraint Johnes, director of research at The Work Foundation, has delved into the labour market report to find some interesting details:

The labour market statistics indicate that the labour market remains remarkably stable. The rolling three month measure of unemployment shows a fall of some 37,000 over the most recent quarter, with the rate of unemployment now at 4.8%.

The unemployment fall has been widely distributed across the country, though there were increases in both the North West and the East. For the UK as a whole, both full-time and part-time employee numbers increased by 31000.

10.55am GMT

Britain's public sector has continued to shrink, to its smallest size in at least 17 years.

Today's figures show that there were 5.33 million people employed in the public sector in June, 13,000 fewer than in March. That's the lowest since comparable records began in 1999

10.52am GMT

John Hawksworth, chief economist at PwC, also fears that unemployment will rise in 2017, even though there's no sign of a Brexit shock yet:

"Unemployment tends to be a lagging indicator, and we could yet see a modest rise in the jobless total next year as uncertainty around the Brexit negotiations dampens business investment and slows overall economic growth.

But we do not expect the UK economy to go into recession, so would not expect any large increases in unemployment.

10.10am GMT

Several City experts are concerned that the number of Britons signing on for unemployment benefit jumped by almost 10,000 last month.

Duncan Weldon of Resolution Group says it's an 'early warning sign' of problems ahead.

Headline unemployment number is v good. But backward looking.

Claimant count and tax receipts are both good early warning signs for UK outlook and neither looks good.

I'd read slowing jobs growth as "UK near full employment" not "Brexit impact". Claimant count more concerning.

The UK's labour market continues to surprise with its resilience to the Brexit shock. The unemployment rate fell unexpectedly to a new 11-year low of 4.8% in the three months to September. This is yet more evidence that the labour market and the wider economy have fared better than expected since June's referendum.

However, there could be storm clouds gathering on the horizon. The claimant count - which in a quirk of the data is a more recent figure than the unemployment rate - jumped by 9,800 in October, with September's figure revised upwards from 700 to 5,600. All in all, it does seem likely that unemployment could tick up somewhat during the coming months, though dire predictions made in the immediate aftermath of the vote appear wide of the mark.

The rise in the claimant count change - which is a fairer representation of the current environment as this data point covers the period until the end of last month - takes the shine off the good news at the very least and possibly even usurps it.

In rising to 9.8k, this indicator came in at its highest level since November 2012 and when you also consider the upward revision of the prior print (to 5.6k from 0.7k) this could be taken as a warning sign that everything may not be quite as rosy as it appears for the labour market."

10.02am GMT

ONS statistician David Freeman has sounded an important note of caution.

He points out that employment growth is slowing; just 49,000 people found work in the July-September quarter, which is the slowest rate since March.

"Unemployment is at its lowest for more than ten years, and the employment rate remains at a record high. Nonetheless, there are signs that the labour market might be cooling, with employment growth slowing.

"The Labour Force Survey also includes information on the nationality and country of birth of workers. That limited evidence suggests the referendum outcome and subsequent devaluation of sterling has had little impact so far on the number of EU workers in the UK labour force.

9.54am GMT

Employment minister Damian Hinds has hailed the news that Britain's unemployment rate has hit its lowest rate since July to September 2005.

Hinds says:

"Yet again we have a strong set of figures, with employment continuing to run at a record high and unemployment falling to an 11-year low.

"Growth is being fuelled by full-time professional jobs while wages are continuing to perform strongly, which underlines the resilience of the UK labour market.

9.51am GMT

New independent stats show the employment rate is the highest since records began in 1971 pic.twitter.com/H3AnLLk2oj

Today's unemployment report shows that the number of people in work rose in the last quarter, and the number of people out of work fell.

9.49am GMT

Both men and women benefitted from the drop in unemployment, as this chart shows:

9.39am GMT

We have a small, and welcome, rise in average earnings too.

Average pay, excluding bonuses, rose by 2.4% annually in the July-September quarter, up from 2.3%.

For Jul-Sep 2016 wages up 2.3% on a year including bonuses and 2.4% on a year excluding bonuses https://t.co/akklsvf2Wc pic.twitter.com/b8Rj7WcLGZ

9.35am GMT

The number of people signing on for unemployment benefit has jumped, by much more than economists expected.

The claimant count rose by 9,800 in October, the ONS reports.

9.31am GMT

Breaking: Britain's unemployment rate has fallen to 4.8% in the three months to September.

That's a new 11-year low, down from 4.9% a month earlier.

9.27am GMT

Barratt Development have sent a shiver through the UK property market this morning by revealing it has cut the price of some high-end London properties, worth over 1m.

Barratt CEO David Thomas told shareholders that.

"Market conditions in London at higher selling prices remain more challenging.

To mitigate these risks we have taken pricing action on a number of our sites in London."

9.21am GMT

One of the big threats facing Britain's labour market is the risk that City banks start to shift operations across to Europe, following the EU referendum.

"We are not planning to change anything any time soon and we will wait and see where the dust settles"

8.58am GMT

Over in Athens, they're getting ready to welcome US president Barack Obama to the historic Acropolis site - by imposing a massive security clampdown in the area.

#Athens #Acropolis: site now closed off in preparation for tour by #obama on second day of visit to #Greece by @POTUS

Obama will in one hour visit Acropolis. City center of Athens getting ready #obama_athens #ObamaGR #Greece #GrAija pic.twitter.com/CtyUoYqQE9

8.36am GMT

Ocado's share price is getting an early morning drubbing, down almost 5%.

It's pure profit for the supermarket - the scheme is "capital light" and will contribute to a 50m-100m incremental profit opportunity outlined in the 2015/16 preliminary results.

This is a big money-spinner for Morrisons and gives it a massive edge over Tesco and Sainsbury in the home delivery market. With prices being slashed and competition fierce, this is the kind of deal that will make a big difference to the bottom line.

Morrison's has launched a service at Amazon. Orders will delivered same day by Amazon. What role Ocado

8.27am GMT

There's no drama in the financial markets this morning.

Both the unemployment rate and wage growth readings are forecast to remain unchanged at 2.3% (though it could creep a bit higher to 2.4%) and 4.9% respectively; the jobless claims figure, on the other hand, is set to see a bit more movement, rising to 1,900 from the 700 seen the month previous.

8.16am GMT

RBC Capital Markets believe Britain's unemployment rate may have actually fallen in the July-September quarter to 4.8%, a new 11-year low.

That would cause much celebration on Downing Street, I'm sure. But it doesn't mean that next year won't be tough, RBC say:

The unemployment rate could actually fall this month to 4.8% from 4.9%. The headline rate is the average of the last three single-month estimates and with the last two months both printing at 4.7% it looks highly likely that we see a tick down by one-tenth.

This does though feel more like a short-term quirk than reflective of the outlook where a more challenging macroeconomic outlook in 2017 should put some modest upward pressure on unemployment. Accordingly our expectation for the range of employment gains over the last three months is 60-100k as a central case.

We're looking for unemployment and wage growth both to be pretty unchanged, which wouldn't provide any obvious support for the pound.

7.59am GMT

Good morning, and welcome to our rolling coverage of the world economy, the financial markets, the eurozone and business.

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