Strong job figures should not point to a failure of forward guidance
16th October 2013
·In the three months to August 2013, unemployment fell 18,000, and employment rose 155,000 ·The rate of youth unemployment remains high at 21% ·Long-term unemployment eased slightly but remains high, with 900,000 people unemployed for over one year · The claimant count fell sharply between August and September, by 41,700 Commenting on the labour market statistics for October 2013, published today by the ONS, David Kern, Chief Economist at the British Chambers of Commerce (BCC) said: -Although concerns remain over youth and long-term employment, the figures show that Britain's labour market is strong and flexible, and that the economy should record satisfactory growth in the third quarter.
The large fall in inactivity is particularly pleasing, as more people are returning to the workforce and are looking for jobs -We expect that the 7% unemployment rate threshold will be reached at least a year earlier than Q3 2016 date indicated by the MPC. However it is regrettable that people in the financial markets are regarding this as a failure of the forward guidance policy. An economy with lower unemployment is good news, and businesses will benefit from a period of stability, even if this is shorter than initially thought. -In the meantime, the government must avoid complacency and build on the progress made, through improving access to finance for viable businesses and providing more support for exporters.