UK Dec jobless claims fall by most since April 2007

The number of Britons claiming jobless benefit fell by more than expected in December and by its biggest amount since April 2007, while the broader ILO level fell for the first time in 18 months, official data showed on Wednesday.

But the improvement masked an increase in the number of people in the labour force who are neither working nor looking for work, with the inactivity rate rising to 21.2 percent in the three months to November, the highest since the three months to August 2007.

The Office for National Statistics said the number of people claiming jobless benefit fell by 15,200 in December, well above forecasts for a fall of 2,500 and coming on top of an upwardly revised decline of 10,800 in November.

The data will give a mixed message to the Bank of England, with signs that unemployment is turning the corner but fuelling concerns about the pace of recovery given that many people are withdrawing from the labour market.

The number of people without a job on the wider ILO measure fell by 7,000 in the three months to November to 2.458 million, the first quarterly decline since March-May 2008 and leaving the jobless rate at 7.8 percent.

The ONS had reported a rate of 7.9 percent in the three months to October.

However, the number of people who were economically active rose to 8.046 million, its highest since records began in 1971.

The ONS also published its new Average Weekly Earnings series, a cash-based measure which it says provides a more reliable gauge of wage developments in the economy and replacing the old Average Earnings Index.

This showed average weekly earnings rose by an annual 0.7 percent in the three months to November. Excluding bonuses, average weekly earnings was up 1.1 percent — the smallest increase since the series began in 2001.

The old average earnings index showed a 1.6 percent annual rise in the three months to November, in line with forecasts.

The ONS said the difference between the two series was due to a shift towards lower-paid occupations which is better reflected in the new Average Weekly Earnings series.