U.K. unemployment claims unexpectedly fell in February by the most in eight months, adding to signs that the economy may be recovering from the impact of the winter freeze. Jobless benefit claims dropped 10,200 from January to 1.45 million, the lowest since February 2009, the Office for National Statistics said today in London. Economists forecast an increase of 1,300, according to the median of 24 predictions in a Bloomberg News survey. Unemployment based on International Labour Organization methods rose by 27,000 in the three months through January to 2.53 million, the highest since 1994. “I don’t think you’ll necessarily see this magnitude of falls going forward,” said Philip Rush, an economist at Nomura International Plc in London, referring to the monthly data. Still, “the Bank of England will see this data as further evidence that the economy is resilient, and that supports the view that the they may raise interest rates sooner than expected.” Recruitment company Reed said Feb. 28 that a gauge of new jobs rose to a record last month as demand for workers in the private sector soared. Unemployment may still increase as the government implements a budget squeeze that includes 330,000 public job cuts. As inflation accelerates, the Bank of England’s Monetary Policy Committee has split on interest rates, with three of the nine members voting to raise the rate in February. Wage Growth The pound declined against the dollar today and was trading at $1.6061, down 0.1 percent, as of 2:16 p.m. in London. Bonds were little changed, with the yield on the benchmark U.K. 10- year government bond at 3.53 percent. Today’s figures showed wage settlements remain subdued, supporting the Bank of England’s argument that above-target inflation isn’t fueling demands for higher pay. Weekly pay excluding bonuses rose 2.2 percent in the three months through January from a year earlier, compared with a 2.3 percent pace in the three months through December. Including bonuses, pay growth accelerated to an annual 2.3 percent from 1.8 percent. “Wage pressures are not concerning and suggest little medium-term inflation threat,” said James Knightley, an economist at ING Financial Markets in London. “With significant public-sector job losses still coming through, and the fact that all of the job created in the U.K. since the end of the recession have been part-time, suggest the slack in the labor market will continue to depress medium term inflation.” Unemployment ‘Mixed’ The U.K. unemployment rate based on ILO standards was at 8 percent in the three months through January, compared with 7.9 percent in the three months through October. That compares with 9.9 percent in the euro area, 8.9 percent in the U.S. and 4.9 percent in Japan. British employment rose 32,000 to 29.16 million in the quarter through January, the statistics office said. The employment rate was 70.5 percent. A separate report from the statistics office showed that the number of people employed in the public sector fell 45,000 to 6.195 million in the fourth quarter from the previous three months. That’s the lowest level since the third quarter of 2008. The data provided a “mixed” picture, Prime Minister David Cameron’s spokesman Steve Field said. While “the rise in employment was driven by a rise in private-sector full-time jobs,” the increase in the ILO unemployment measure was “a concern,” he told reporters in London. Job-Cut Fears U.K. consumer confidence stayed close to the lowest level since March 2009 last month, according to GfK NOP Ltd. Bank of England Governor Mervyn King has warned the recovery is likely to be “choppy” after the economy shrank 0.6 percent in the three months through December. The number of Britons who think they may be made redundant rose in the quarter through December on concerns about government spending cuts, the Chartered Institute of Personnel and Development said on Feb. 4, citing a YouGov Plc survey. The study found that 20 percent of 2,053 people questioned believe “it is likely” they could lose their job, compared with 19 percent in a September survey, the group said. Lloyds Banking Group Plc (LLOY), the U.K.’s biggest mortgage lender, said on Feb. 8 that it plans to cut 200 jobs in its insurance division as part of its integration with HBOS Plc. Barclays Plc (BARC), Britain’s third-largest bank, said on Feb. 2 that it may eliminate as many as 285 U.K.-based jobs at its Barclaycard unit and transfer the roles overseas. To contact the reporter on this story: Scott Hamilton in London at shamilton8@bloomberg.net To contact the editor responsible for this story: Craig Stirling at cstirling1@bloomberg.net

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