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Unemployment has topped 2 million on the widest measure of joblessness, while the claimant count has suffered its biggest jump on record.
The Office for National Statistics today confirmed unemployment rose to almost 2.03 million in the three months to January – the highest in 12 years and a rise of 165,000 from the previous quarter.
That was broadly in line with expectations but the claimant count – which only includes those drawing jobseeker's allowance – surged by 138,400 last month, easily exceeding the record rise of 118,000 set during the depths of the early-1990s recession.
The January figure was revised to show a rise of 93,500, against the 73,800 reported a month ago. That means the claimant count has surged by around 600,000 in the past year. Records for the claimant count were first kept in 1971.
City economists had expected a jump of around 80,000 but the ONS had indicated last month the gap between data collection points would be five weeks for February, not the usual four, so a bigger number was always likely.
Joblessness on the claimant count is now up to 4.3%, its highest since March 1999. On the wider International Labour Organisation measure, which includes those out of work but not claiming benefits, the jobless rate is 6.5%, the highest since Labour came to power in 1997.
Economists were not hugely surprised by the bad numbers, though.
"Up until now, although the official labour market data have been pretty bad, there hadn't been the sharp worsening reflective of the much worse GDP data in the final quarter of last year, and the masses of announced lay-offs. That was until today's number, which is more in keeping with the news we have on activity," said Alan Clarke at BNP Paribas in London.
James Knightley at ING Financial Markets said: "Today's UK labour market data is truly awful. With household income growth slowing dramatically, when combining the unemployment and wage data, at a time when the savings rate is starting rising the outlook for consumer spending is getting worse and worse."
Economists were also startled by a dramatic slowdown in average earnings growth, which fell to 1.8%, the lowest on record, largely due to a drop in City bonuses.
That stands in stark contrast to the expectations of many members of the Bank of England's monetary policy committee who had predicted as recently as last autumn that pay growth would surge this year.
Economists said that, overall, the numbers were so bad the Bank would likely have to extend its money creation operation that began last week.
- Unemployment and employment statistics
- Recession
- Economics
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- Social exclusion
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