UK unemployment at lowest in a year

Wed, Aug 15, 2012, 01:00

UK unemployment levels dropped to their lowest in a year as the Olympic Games created jobs, showing the labour market's resilience in the face of deepening recession.

Jobless-benefit claims fell 5,900 to 1.59 million, the Office for National Statistics said today in London.

The jobless total measured by International Labour Organization methods fell to 8 per cent in the second quarter from 8.1 percent in the three months through May.

The willingness of companies to keep hiring workers when the economy is shrinking has provided a boost for prime minister David Cameron and perplexed economists.

Some say the improvement is unsustainable and unemployment may rise in coming months. "It might be difficult to sustain these strong trends," said Nida Ali, an economist at Ernst and Young's ITEM Club in London.

"Activity in the second half of 2012 is expected to remain sluggish, implying that the private sector will find it increasingly difficult to create jobs."

Britain's economy shrank 0.7 per cent in the three months through June, the third straight quarter of contraction.

The Bank of England sees the economy contracting about 0.2 per cent this year, according to figures published today.

Separately, minutes of the Bank of England's August 1-2 meeting showed policy makers voted unanimously to keep their bond-purchase target unchanged this month.

They said they will assess the need for other measures in light of the impact of their new credit-boosting program.