Unemployment in the U.K. rose to the highest level in 17 years in the three months ending in January despite a decrease in new jobless claims, although slow wage growth also added to the mixed picture of the labor market recovery, according to Financial Times. On Wednesday, the Office for National Statistics reported that unemployment in the U.K. added 27,000 in the quarter to January to reach 2.53 million to bring the unemployment rate to 8% of the workforce rather than remaining at 7.9% as economists had expected.
The report also showed that the number of Britons claiming jobseeker’s allowance dropped by 10,200 to 1.45 million in February, which is the lowest level since February 2009. Employment in the quarter to January was up 32,000 to 29.12 million. According to The Daily Telegraph, wage growth was seen slowing to an annual rise of 2.2% during that period, which is less than half of the retail price index reading of 5.1% growth, creating an effective 2.9% reduction in wages in real terms. Howard Archer of IHS Global Insight noted the likely negative effect of the trend on consumer spending, saying workers’ “purchasing power continues to be squeezed markedly.”
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