It has recently been revealed that the UK unemployment total fell by 88,000 in the first quarter of the year to 2.43 million. This is the largest fall that has been seen since the summer of 2000 and is an indicator that the economy could be getting back on track. The percentage figures of this fall are from 7.9% down to 7.7%. These numbers have even surpassed what was expected by many, with the city finding it very encouraging to the state of the economy.
It is the private sector that is largely driving this growth and creating jobs at a faster rate than the public sector is losing them. This will have a big impact on the service industries that this country is largely dependent on. This includes many jobs such as IT auditing managers, analysts and insurance brokers to name a few.
However, the announcement was not all good news with wages being largely subdued. This is because the economic environment means that workers are finding it difficult to push for higher wages. This is shown in the fact that earnings excluding bonuses only increased by 2% from a year ago which is its slowest rate since August. With the effect of rising inflation hitting wages as well, it could be that workers will continue to struggle.
This negative news is what the markets have reacted to with the value of the dollar falling and the value of the FTSE also seeing a slight drop. Whilst the rise of the private sector has been encouraging, economists are continuing to be cautious. They have severe doubts as to whether the improvement is sustainable, especially given that the majority of public sector job cuts are still to come.
