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UK jobless benefit claimants unexpectedly fall in July despite Brexit shock

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The number of people claiming unemployment benefit in Britain unexpectedly fell in July despite the shock to the economy caused by the Brexit vote, official data showed on Wednesday.

[LONDON] The number of people claiming unemployment benefit in Britain unexpectedly fell in July despite the shock to the economy caused by the Brexit vote, official data showed on Wednesday.

Claimants fell by 8,600 in the month, compared with an increase of 900 in June, the Office for National Statistics said.

Economists taking part in a Reuters poll had expected the number of benefit claimants - which is considered to be a potential early warning sign of an economic downturn - to rise by 9,500 as employers responded to the uncertainty caused by the decision by voters to leave the European Union.

Wednesday's figures represented the first official measure of Britain's labour market since the June 23 referendum.

A survey published on Aug 5 by a body representing the recruitment industry had suggested employers cut hiring in July as the number of permanent jobs placed by staffing firms fell at the fastest pace since 2009.

The Bank of England expects unemployment to rise sharply as a result of the uncertainty caused by the Brexit vote. It cut interest rates to just 0.25 per cent earlier this month and took other measures to cushion the economy.

Samuel Tombs, an economist with Pantheon Macroeconomics, said before Wednesday's data release that the claimant count would need to be about 80,000 higher on average in the third quarter than in the previous three-month period to signal a recession, requiring average month-to-month rises of 40,000 claimants.

The July data was measured on July 14, three weeks after the referendum, meaning it might not reflect the full extent of any post-Brexit fall in hiring, economists said prior to the release.

The ONS also said on Wednesday that the number of vacancies in the three-month period to the end of July fell by 7,000 from the three months to the end of April to 741,000.

Tombs of Pantheon Macroeconomics said a decline of more 20,000 vacancies would send a recession signal.

Much of the ONS data covered the labour market in the run-up to the referendum.

Britain's unemployment rate held steady in the three months to June at 4.9 per cent, as expected in the Reuters poll of economists.

Wage growth in the April-June period picked up slightly, reflecting the introduction of a higher minimum wage in April.

The number of unemployed fell by 52,000 to 1.641 million while the number of people in work rose by 172,000 to 31.750 million and pushing the employment rate at 74.5 per cent, a latest record high.

The ONS said workers' total earnings including bonuses rose by an annual 2.4 per cent in the three months to June, edging up from 2.3 per cent in the three months to May and matching expectations in the Reuters poll.

Excluding bonuses, earnings rose by 2.3 per cent year-on-year, also edging up from May and in line with the poll expectations.

REUTERS