UK unemployment falls as economy looks set to grow

Wed Sep 12, 2012 9:25am EDT
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By Sven Egenter and Matt Falloon

LONDON (Reuters) - The number of Britons on unemployment benefits dropped in August by the largest amount in two years as companies created new jobs, raising hopes that improved prospects will allow consumers to spend more and get the recovery going.

Britain's economy has been mired in recession since late 2011 official figures show, but it looks set to post some growth in the third quarter, although it is unlikely to be a roaring rebound.

Employment rose to the highest level in over four years between May and July, providing rare relief for the government, under fire for its tough austerity program and facing calls to kick-start a meaningful recovery.

The slightly brighter picture raises questions about the need for more Bank of England stimulus, and policymaker Ben Broadbent, who voted against the current easing round, said policy should focus more on job trends than on output growth.

The number of people claiming jobless benefit fell by 15,000 last month, the Office for National Statistics (ONS) said, beating even the most optimistic economists' forecast.

The London Olympics may have helped to create jobs and bring unemployment down, the ONS said.

Many economists took the job numbers as another indication that the economy may be slowly moving out of recession.

"With euro zone break-up fears fading and the U.S. set to unveil further stimulus tomorrow, the hope is that we will start to see more optimism in the corporate sector on economic prospects, which can lead to a further strengthening of the UK's jobs market," ING economist James Knightley said.   Continued...