Number of jobless people in UK falls to 1.7 million as earnings rise by 3.9% on previous quarter

The number of unemployed people in the UK dropped by 7,000 to 1.7 million in August to October of this year, according to government figures.

The Office for National Statistics report showed that the number of jobless people claiming benefit fell by 5,700 in November to 950,800 – its sharpest drop since January 2005.

Average earnings in the three months to October also rose by 4.1% from 2005, up 3.9% on the July to September figure, the Office for National Statistics report showed.

The report attributed the rise in earnings to an increase in demand for private sector services.

John Philpott, chief economist at the Chartered Institute of Personnel and Development, said the increase in earnings reflected the rise in the Retail Price Index (RPI) inflation.

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“With RPI inflation close to 4% at the outset of the key winter pay round it is vital that employers in all sectors remain firm in the face of demands for cost of living related pay rises. This might sound ‘Scrooge like’ as we approach the festive season but too much generosity on pay in the coming months would result in a less than happy 2007 for interest rates and job prospects.”    

Geoffrey Dicks, UK economist at Royal Bank of Scotland, said: “The fall in unemployment reflects a modest rise in the labour force rather than rapid job creation. The rise in earnings simply unwinds the previous month’s decline and leaves earnings growth very much in the range that it has been in all year.”