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Despite a double-dip recession the number of people out of work has dropped again

The gravity-defying show continues. Despite a double-dip recession the number of people out of work has dropped again. In the three months to August the number dropped by 50,000 to 2.528 million; the number of people claiming unemployment benefit dropped by 4,000 in September; and the number of people in employment rose to 29.590 million - the highest since records began in 1971. Even the number of young people (aged 16-24) out of work has fallen.

This is a startling set of numbers and is much better than analysts expected. The data are also part of a trend for most of this year of improving employment statistics so can't be written off easily as an anomaly. This despite the fact that the economy has ground to a halt - one would normally expect companies to shed jobs when business is tough but this is isn't happening - quite the reverse.

The committee which sets policy at the Bank of England is split on whether to pump more money into the economy Credit: Press Association

So is there a problem with the data? The ONS - the government's statistics office - published a report yesterday in which it argued that the GDP figures which show the UK to be in a two-year stagnation are unlikely to be under-reported. Instead it suggested that companies are keeping people in jobs for which they are over-qualified and so less productive, leading to lower growth in the economy as a whole.

It has announced a series of further studies to examine the puzzle. Meanwhile, the Bank of England thinks companies are so worried by the uncertain economic outlook that they might be hiring staff instead of investing in equipment because people are easier to sack than it is to unwind investment in capital.

It seems members are divided on how effective quantitative easing is Credit: Press Association

So how to manage the economy until the riddle is solved? The committee which sets policy at the Bank of England is split on whether to pump more money in another batch of QE to boost performance. The minutes of its last meeting were published this morning and it seems members are divided on how effective quantitative easing is.

The committee will base its decision next month on inflation (which is falling - and would provide room for more QE); and on the GDP figures. A return to growth in the economy would persuade them to hold off but continued weakness might make them think that more help is needed, despite the encouraging employment picture, to avoid things falling down to earth with a bump.