Glimmer of hope amidst gloomy unemployment figures

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Unemployment figures hit a 17-year high.
Unemployment figures hit a 17-year high. Photo: Reuters

Are we at the turning point, is Britain in recovery mode? Economic data coming thick and fast is sending conflicting signals with some encouraging signs and some rather less so.

Take today's unemployment statistics. The top line figure is not good: in the three months to January another 28,000 people joined the dole queue taking the total number of people out of work to a near-17 year high. Youth unemployment continues to rise, as does long-term joblessness and wages are falling further behind inflation.

The main job losses have been in the public sector.
The main job losses have been in the public sector. Credit: Reuters

It makes for pretty grim reading and is causing concern. Not enough jobs are being created, say some, and as the number of people out of work rises, the hoped-for recovery in consumer spending may evaporate before it gets going.

But dig in to the numbers a little deeper and there may be signs for hope. The main losses have been in the public sector, down 37,000 in the last three months of 2011 on the previous quarter.

News reports today have focussed on the contrast with private sector where companies have added 45,000 jobs – giving some succour to Chancellor George Osborne who has predicted businesses would grow and take up the slack. But I think there is better news still.

The pace of job losses in the public sector has slowed down.
The pace of job losses in the public sector has slowed down. Credit: Press Association

The pace of those losses in the public sector has slowed dramatically, 37,000 is a lot but it’s half the 75,000 in the third quarter of last year and much lower than a startling 126,000 jobs lost in the second three months of last year.

The Office for Budget Responsibility estimated that in the year to the end of this month 170,000 jobs in the public sector will have to go to meet the budget cuts. Today’s figures show that they were already well ahead of that target by Christmas.

Samuel Tombs at Capital Economics reckons that means the rate could slow further, even below the roughly 27,000 the OBR expected for each quarter as the public sector sheds 710,000 jobs by 2016/17. In short, governments have pushed most of the cuts to the beginning of this austerity programme so may be able to ease off a bit now.

Add in a survey from Manpower earlier this week which suggested the 2,100 private sector employers it spoke to are beginning to feel more optimistic about hiring and we may – just may – be seeing a recovery.