U.K. Jobless Less Than Forecast, Slump May Be Easing

Wednesday, June 17, 2009

U.K. unemployment rose less than economists forecast in May and the Bank of England said the risk of a deeper slump has receded, the latest evidence to indicate the economy is past the worst.

Claims for jobless benefits rose 39,300 to 1.54 million in May, the smallest increase since July last year, the Office for National Statistics said today. Economists predicted a gain of 60,000, the median of 28 forecasts in a Bloomberg News survey shows. Separately, the Bank of England said in London “the risk of a continued sharp contraction” has “receded somewhat.”

Signs are mounting that the U.K. economy is recovering from the worst recession since 1979, with manufacturing output rising for a second month in April and services activity expanding for the first time in a year last month. At the same time, the Bank of England said in minutes of its June 4 policy meeting published today it’s too soon to say that its emergency money- printing program is working.

“While the economy may see positive growth at some point later this year, the risk of relapse is still high,” said James Knightley, an economist at ING Financial Markets in London.

A broader measure of unemployment rose 232,000 to 2.26 million in the three months through April, the highest since November 1996, the statistics office said. The Confederation of British Industry expects unemployment to peak in the second quarter of 2010 at 3.03 million, a rate of 9.6 percent, instead of the 3.25 million forecast in April.

(Bloomberg)