UK jobless rate rises, central bank split on stimulus

Wed Apr 17, 2013 8:19am EDT
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By Olesya Dmitracova and David Milliken

LONDON (Reuters) - British unemployment rose in February and wage growth slowed to a record low, suggesting cracks are starting to show in the labor market at a time when the central bank is split on another cash boost for the economy.

Britain's main jobless rate rose to 7.9 percent in the three months ending in February, the highest rate since the three months to August 2012 when it was also 7.9 percent, the Office for National Statistics said on Wednesday.

The Bank of England, meanwhile, indicated that it was still some way from giving the flat-lining economy additional help to create jobs, prompting some economists to push back their forecasts for when more stimulus will come.

Minutes of the bank's April policy meeting showed it remained divided on whether to restart asset purchases to spur economic growth, with no sign that the differences between policymakers were narrowing.

The euro hit a one-month high against sterling after the jobs data.

"A lot of the froth and really good news we had over the last year on jobs is becoming exhausted, which shouldn't be a surprise when there is not much growth around," said Alan Clarke, economist at Scotiabank.

Britain's employment growth in the past year has puzzled policymakers and raised questions over how much longer its relative strength can be sustained without a pick-up in the economy.

One way employers have been able to keep staff is by limiting pay rises.   Continued...

A man stands outside a state Job Centre employment office in Coalville, central England, December 14, 2011. REUTERS/Darren Staples