The number of Britons claiming unemployment benefit rose by much less last month, official data showed on Wednesday, in a sign that the deterioration in the

labour market was slowing.

While the unemployment total reached its highest level in over 17 years at 2.685 million, the number of employed also rose in the three months to November.



What catches the eye is the relative weakness of average earnings. The unemployment picture is not telling us anything new at this point. We know it's going to be very difficult year for the jobs market.

It's the softness in average earnings which will be of more significance to the MPC at this point. You have headline average earnings now dipping below 2 percent again and I think from their perspective it suggests that the downward pressure on inflation in 2012 and heading into 2013.

So on the back of yesterday's CPI numbers it probably argues that they will have to do more to add more stimulus to the economy. At the margin it suggest they will have to do more QE and at this point it's a question of 'when' they do it rather than 'if'.


The broader ILO measure of unemployment rose to stand at its highest level since the three months to August 1994. That said, actual employment levels still rose by 18,000 so given unemployment also rose this suggests that there has been a large increase in the size of the workforce.

Presumably this reflects people who may have classified themselves as retired, but are now looking for work, or maybe a decline in students, who instead are now looking for work. Meanwhile, average wage growth slowed, which is unsurprising given widespread public and private sector pay freezes, and remains firmly in negative territory in real terms given inflation is at 4.2 percent.

This all suggests that household finances remain under pressure, which is not good news for consumer confidence or consumer spending and adds to the case for further stimulus from the Bank of England in February.


It's very surprising the claimant count has not only been revised down (for November) but hardly risen at all. It seems inevitable that unemployment is going to rise quite strongly.

There is something strange going on and it's a genuine puzzle why the count is so low.


Overall, there's a slightly softer feel to these figures. The labour market is struggling and forward-looking indicators such as vacancies and hiring intentions suggest it's going to be rocky in the first half of this year.

The fall in full-time employment is the key figure and you've got a bit of an offset from part-time workers, but the underlying trend just looks a little bit weaker.