UK claimant count posts biggest rise since 1992

The number of Britons claiming jobless benefits rose in July by the largest amount since 1992 and average earnings in the three months to June rose by the weakest amount in five years, official data showed on Wednesday.
The Office for National Statistics said the claimant count rose for a sixth consecutive month, by 20,100, after an upwardly revised increase of 20,000 in June. That was the biggest jump since December 1992 and above forecasts for a 17,500 rise.
Average earnings including bonuses grew an annual 3.4% in the three months to June, the weakest rise since August 2003 and below forecasts for an increase of 3.6%.
The figures indicate a weakening economy is taking its toll on the labour market and helping to keep a lid on wage growth, despite headline inflation running at more than twice the Bank of England's 2% target.
Policymakers have been concerned that rising living costs could drive wage demands higher and make it harder to maintain price stability in the economy.
"It's fairly clear that the labour market is deteriorating at a rapid pace and I think it's going to continue to do so because of slower economic growth and concerns by companies that the downturn might actually be longer and more pronounced than originally thought," said George Buckley, economist at Deutsche Bank.
The weaker than expected data are likely to add to growing expectations that the next move in interest rates will eventually have to be down as the economy risks falling into its first recession since the early 1990s.
Short sterling contracts rose briefly after the data before slipping back with investors awaiting the BoE's quarterly inflation forecasts due at 0930 GMT.
"The main interest is this combination of softer wage inflation numbers which should provide some reassurance (but) the Bank (of England) will probably remain quite circumspect with inflation heading above 5%," said Ross Walker at RBS Financial Markets.
The central bank's Inflation Report is expected to show a deteriorating outlook for both growth and inflation, although the current spike in inflation is seen eventually subsiding as commodity prices stabilise and the economy weakens.
The ONS said the internationally-recognised ILO unemployment figure rose by 60,000 in the three months to June — the biggest rise since mid-2006 — taking the rate up to 5.4% from 5.2% in the three months to March.