The unemployment rate rose to its highest since 1995, while claimant count unemployment increased at a slower pace. The November ILO unemployment rate was higher than expected at 8.4% from 8.3% previously (consensus/BarCap: 8.3%). The number of jobless increased by 118k on the quarter to reach 2.68m.

The unemployment rate for people aged between 16 and 24 increased to 22.3% on the three months to November with the total number of unemployed in this age group reaching 1.04m. On the other hand, December claimant count unemployment increased by only 1.2k while the previous month's figure was revised down to 0.2k (consensus: 7.0k, BarCap: 7.1k). The claimant count data were better than expected in this release, maintaining the slower pace of increase in the number of claimants notices over the past few months.
 
Earnings growth remained weak. Average weekly earnings growth slowed to 1.9% 3m/y from 2.1% 3m/y previously (Consensus/BarCap: 2.0%). Core earnings growth, on the other hand, picked up slightly to 1.9% from 1.8% (consensus: 1.9%, BarCap: 1.8%), but remains consistent with weak earnings growth. While inflationary pressures have eased since September, they remain elevated and coninue to put pressure on already weak income growth. As a result, real earnings growth remained negative in November for the 20th consecutive month.
 
The data show labour market conditions deteriorating at a steady pace while earnings growth remain subdued, a picture that has been little changed in recent months. Nevertheless, some encouraging signs have emerged from the claimant count unemployment measure with its pace of increase slowing significantly. The claimant count measure tends to lead the ILO unemployment measures and as such this could be a sign that the pick-up in unemployment could be stabilising. However, the deteriorating economic conditions increase the uncertainty around such an outcome. Looking ahead, we expect unemployment to continue its upward trend with the ILO unemployment rate increasing to about 8.8% at the end of 2012. Furthermore, we expect this weakness in employment and the subdued economic conditions to continue to reign in on wages.
 


source: BarCap