Unemployment plummets by 88,000 - biggest quarterly drop in a decade

Published by Ross Macmillan for 24dash.com in Housing and also in Central Government, Communities, Local Government

Unemployment has fallen by 88,000, while the number of people in work has increased by a similar number, new figures showed today.

The quarterly fall was the biggest in more than a decade, taking the jobless total to 2.43 million.

But the number of people claiming Jobseeker's Allowance (JSA) jumped by 19,600 last month to 1.49 million, the worst figure for more than a year.

Economic inactivity also increased, up by 39,000 in the three months to April to reach 9.37 million, more than a fifth of the working age population.

Government hopes that private firms will create jobs as posts are cut in the public sector were given a boost with news that employment in the private sector increased by 104,000 in the first three months of the year to 23 million.

At the same time, public sector employment fell by 24,000 to 6.1 million, and the decline would have been bigger but for the 15,000 temporary jobs created to deal with the Census.

The 88,000 fall in unemployment in the three months to April was the biggest quarterly cut since the summer of 2000.

The reduction was mainly among 16 to 24-year-olds, with unemployment in this age group being cut by 79,000 to 895,000, the lowest figure for two years.

Other data from the Office for National Statistics showed that employment increased by 80,000 to 29.2 million, still 333,000 lower than the pre-recession peak in May 2008.

The number of men claiming JSA increased by 11,000 to more than a million, while 8,500 more women joined the claimant count, taking the total to 483,700, the highest figure since 1996.

Changes to lone parent income support has affected the number of women claimants.

Annual earnings increased by 1.8% in the year to April, down by 0.6% on the previous month, largely because of lower growth in bonuses in private firms.

Average pay was £460 a week in April, up by 1.8% on a year ago.

The UK's employment rate has edged up by 0.1% to 70.6%, up by 0.4% on a year ago.

Full-time employment increased by 49,000 in the latest quarter and by 31,000 for part-time jobs.

There were 31.3 million jobs in the economy in March after a huge increase of 121,000 over the quarter.

Unemployment in the regions between February and April was:

Region      Total         Change Unemployment     Unemployed on quarter rate

North East 118,000 minus 8,000 9.5%

North West 277,000 plus 13,000 8.1%

Yorkshire/Humber 237,000 minus 8,000 9.0%

East Midlands 176,000 minus 6,000 7.6%

West Midlands 235,000 minus 28,000 8.8%

East 191,000 plus 8,000 6.3%

London 384,000 minus 12,000 9.0%

South East 255,000 minus 25,000 5.7%

South West 174,000 plus 4,000 6.5%

Wales 115,000 minus 9,000 7.9%

Scotland 207,000 minus 10,000 7.7%

N Ireland 61,000 minus 6,000 7.2%

Employment Minister Chris Grayling said: "This is another encouraging set of figures and a very welcome drop in unemployment.

"It's also good news that employment is going in the right direction with half a million more people in private sector jobs compared to this time last year.

"The fall in the number of unemployed young people also means that the total is now lower than it was before the General Election.

"However, we still face a challenge to help more of the long- term unemployed into work.

"Last week I announced that the new Work Programme is now up and running and will provide tailored support for more people on benefits."

The Government said private and voluntary sector organisations were investing £581 million up front in the biggest welfare-to- work programme this country has ever seen.

Ian Brinkley, centre director at The Work Foundation, said: "The labour market continues to defy warnings that the economic recovery has come to a halt. Private sector job growth in the three months to April compared with the previous three months was strong and dominated by full-time employment.

"The fall in headline unemployment was much stronger than expected, but is driven by more young people going into higher and further education.

"The recovery is still having little impact on underlying unemployment and groups such as the young and the over-50s still face challenging times. Tougher times may well be ahead, but today's figures are encouraging."

John Walker, chairman of the Federation of Small Businesses, said: "It is good news that unemployment has fallen and employment has risen, having remained stagnant for some time.

"It is now vital that we continue this trend by encouraging those budding entrepreneurs that want to go it alone to set up in business and incentivise small firms to take on more staff. We know that small businesses want to employ.

"They have told us that if the Government reduced payroll costs they would take on staff. Extending the National Insurance contributions holiday to existing firms must be at the heart of Government plans for growth if we to continue to reduce unemployment."

TUC general secretary Brendan Barber said: "Today's unemployment figures are a welcome tonic to the raft of recent poor economic data. The significant fall in youth unemployment is encouraging.

"But with 820,000 more people out of work now than they were before the recession, the labour market is still a long way off a return to full fitness.

"Public sector job cuts are starting to hit and, with nearly half of new private sector jobs only part-time, many new job entrants are having to take a big cut in earnings.

"The recent jobs growth is not being shared evenly around the country. Employment rates are still falling throughout northern England and there are still around 30 dole claimants chasing every vacancy in parts of Scotland and London.

"The Government must do more to encourage jobs growth throughout the UK to prevent a twin-track labour market where huge swathes of the country miss out."

Nigel Meager, director of the Institute for Employment Studies, said: "The next few months will be critical for the UK labour market. During this period the effects of public spending cuts will start to show up in a major way in the employment figures.

"Will the much-vaunted private sector recovery begin to generate jobs on a scale necessary to compensate for the cuts? Or are the cuts simply taking too much demand out of the economy too quickly and threatening the already tentative recovery?

"On the basis of today's figures, it would seem that the jury is still out. At first glance the latest data suggest relatively good news, with private sector jobs growth still outweighing public sector job loss. It needs to be stressed, however, that the bulk of the employment impact of public sector cuts is yet to be felt."

Dave Prentis, general secretary of the Unison union, said: "The small fall in the jobless total will be no comfort to the hundreds of thousands of public sector workers with redundancy notices hanging over their heads.

"The figures show that Government's cuts have led to another 24,000 public sector workers losing their jobs. Economic inactivity has gone up and the private sector is still weak.

"It is no position to create the number of jobs needed to stop thousands more public sector workers joining the dole queues.

"The number of 16 to 24-year-olds finding jobs is welcome, but sadly this blip isn't likely to last long as school leavers and graduates start to flood the jobs market."

John Philpott, chief economic adviser at the Chartered Institute of Personnel and Development, said: "Today's jobs figures will cheer the Chancellor ahead of his speech at the Mansion House this evening.

"Signs that wage pressure is moderating in the face of higher inflation will also come as good news to the Bank of England. This should counter the case for a hike in interest rates later in the year.

"The only obvious concerns are that job vacancies appear to be drying up, while the number of people on jobseeker's allowance is clearly on the rise, although the latter increase owes much to changes in the benefit regime and should not in itself be taken as a sign that the jobs market is starting to weaken.

"Another potential worry is the ongoing scale of job losses in the public sector.

"Public sector employment, excluding the nationalised banks, fell by 135,000 in the financial year 2010/11. This is many times bigger than the initial Office for Budget Responsibility (OBR) forecast at the time of last June's emergency budget and closer to CIPD estimates at that time.

"If the OBR forecasts for the period to 2015 as a whole prove similarly optimistic, the impact of public sector job cuts on overall unemployment could be significantly worse than the Government currently expects."