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Unemployment figures: what the analysts say

Guardian Economics 21st January 2009

Howard Archer, chief UK and European economist at IHS Global Insight

"Claimant count unemployment surged by a further 77,900 in December. While modestly less than feared and down from 83,100 in November, it was still an awful figure and the 11th successive rise. In addition, unemployment climbed by 131,000 in the three months to November on the International Labour Organization measure, taking it up to an 11-month high of 1.923 million. The ILO unemployment rate jumped to 6.1%, which is the highest level since the first half of 1999.

"While employment only fell by a lower-than-expected 26,000 in the three months to November, it is significant that the number of full-time employed plunged by 89,000. Meanwhile, the number of job vacancies was down by 69,000 in the three months to December.

"There is a rapidly increasing risk that claimant count unemployment will reach 2 million before the end of 2009. Furthermore, unemployment on the ILO measure is poised to rise above 2 million imminently and it seems ever more likely to reach 3 million in 2010."

Colin Ellis, European economist at Daiwa Securities

"The speed with which the deterioration in activity is feeding through to the labour market continues to be frightening – our previous view that unemployment could reach 3 million is in danger of needing revisions.

"Alongside this deterioration in quantities, labour market prices remained subdued – average earnings growth in the three months to November was just 3.1% year-on-year (3.6% excluding bonuses), the weakest since March 2002 and well below the 4.5% 'reference point' the MPC pays attention to. These data just underline how wrong the MPC were about the risk of spiralling wage growth last year – the temporary rise in short-term inflation expectations was irrelevant compared to the downturn in the economy, squeezing margins and resulting in current and prospective job cuts. In fact, these data are yet another sign that the economy is unravelling far faster than the MPC's medicine can take effect, in no small part due to the current dislocation in credit markets."

Philip Shaw at Investec

"The rise in unemployment is absolutely awful ... There's little doubt whatsoever that the labour market is loosening, and loosening very quickly."

Charles Davis, economist at the Centre for Economics and Business Research

"While Obamamania may have distracted us all yesterday, there is no stopping the grim economic news in the United Kingdom. The latest data shows that unemployment rose by 77,900 in December on the claimant count measure. This was slightly lower than expectations of an 82,000 rise but there was a notable revision to the November data that showed unemployment rose by 83,100 rather than the 75,700 previously thought. The number claiming unemployment benefit now stands at 1.157 million – the highest since 2000 – and is likely to surpass 2 million in the latter half of 2009.

"Through January to December 2008, claimant count unemployment rose by 362,000 – with almost six in ten (213,000) of these additional jobseekers coming in the final quarter. This points towards a particularly sharp decline in quarterly economic output when we see the Office for National Statistics' first estimate of gross domestic product on Friday – we expect a quarter-on-quarter decline in the range of 1.2-1.5 per cent.

"As the economy contracts and business failures rise, we expect ILO unemployment to reach at least 2.9 million by early 2010 – there are clear upside risks to this."

Alan Clarke at BNP Paribas

"This is a very rapid pace of job shedding. It is still very early days in this recession and there is plenty of bad news in the pipeline.

"The public finances are also pretty bad. They are deteriorating pretty much in line with what you would expect given lower tax receipts and increased government spending."

Theresa May, shadow work and pensions secretary

"The rising tide of unemployment will be of real concern to hard-pressed families up and down the country. Gordon Brown's complete failure to prepare Britain for recession means that the UK now faces the highest rise in unemployment of any G7 country.

"Labour's astonishing claim this morning that there is 'light at the end of the tunnel' shows how out of touch they are. This is a government that has clearly run out of ideas."

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