U.K. jobless claims fell less than economists forecast in November, suggesting the recovery in the labor market may be moderating. The number of people receiving unemployment benefits declined 1,200 from October to 1.46 million, the Office for National Statistics said today in London. The median of 25 forecasts in a Bloomberg News survey was for a drop of 3,000. Unemployment measured by International Labour Organization methods rose by 35,000 to 2.5 million people in the quarter through October. Bank of England Deputy Governor Charles Bean said this week the economic recovery “has remained on track” and may have persisted in the fourth quarter. Nevertheless, policy makers have split three ways on the need to raise the key interest rate to tame inflation or buy more bonds to support growth as the government readies the biggest budget cuts since World War II. “The labor-market recovery is flagging a bit, and the big question is whether the significant decline in public-sector employment will be offset by higher private-sector employment,” said George Buckley, an economist at Deutsche Bank AG in London. “The bank is doing the right thing by keeping policy on hold.” The pound extended its decline against the dollar after the report and was at $1.5720 as of 9:44 a.m. in London, down 0.4 percent since yesterday. Unemployment Rate A separate report from the statistics office showed that the number of people employed in the public sector fell 33,000 to 6 million in the third quarter from the previous three months, the biggest drop since records began in 1999. The ILO unemployment rate increased to 7.9 percent in the three months through October from 7.8 percent in the previous quarter, the statistics office said. That compares with 10.1 percent in the euro region, 9.8 percent in the U.S. and 5.1 percent in Japan. U.K. employment fell 33,000 in the quarter through October, bringing the total number of working people to 29.13 million, the statistics office said. The number of people unemployed for more than 12 months was 839,000, the highest in almost 14 years. Policy makers have divided as inflation remains above the government’s 3 percent upper limit, unexpectedly accelerating to 3.3 percent in November. Bean said Dec. 13 the strength of inflation may suggest there’s less slack in the economy than previously assumed, though there are risks “to both sides” of the economic outlook. ‘On Track’ “As 2010 draws to a close, the good news, then, is that the recovery, here and more widely, has remained on track,” Bean said. Moreover, the high rate of inflation “could indicate that the margin of spare capacity is not as large as the collapse in activity might suggest,” he added. In November, the claimant count rate held at 4.5 percent from the previous month, the statistics office said. The decline in October jobless claims was revised to 5,200 from 3,700. The Treasury’s fiscal watchdog said the U.K. faces a “sluggish” recovery and forecasts that while about 330,000 government jobs will be axed by 2015, the loss will be more than offset by the creation of about 1.5 million private-sector jobs. “This is going to be a long, difficult road and this underlines the challenge we’ve got,” Work and Pensions Minister Chris Grayling told Sky News today. “The only way you can create long-term sustainable employment growth is to have a private sector that’s moving again.” London-based BAE Systems Plc, Europe’s biggest arms maker, said Dec. 9 it will cut 1,300 jobs at seven sites across the U.K. after the government terminated the Harrier and Nimrod aircraft programs as it slashes defense spending. Hiring Plans Still, about 45 percent of companies plan to hire as normal over the next six months, up from 11 percent a year ago, the Confederation of British Industry said this week, citing a survey it conducted with KPMG LLP. Standard Chartered Plc said last month it plans to hire about 1,800 people for its global trading and underwriting operations over the next three years. Weekly pay including bonuses rose 2.2 percent in the three months through October from a year earlier, compared with a 2.1 percent gain in the third quarter, the statistics office said. Regular pay growth accelerated to 2.3 percent from 2.2 percent. The Monetary Policy Committee this month voted to maintain the benchmark rate at 0.5 percent and the bond-purchase program at 200 billion pounds ($315 billion). Minutes of this month’s decision will be published Dec. 22 and will show whether Andrew Sentance continued a push since June to raise the key rate, while Adam Posen argued for a third month for more bond purchases. To contact the reporter on this story: Jennifer Ryan in London at jryan13@bloomberg.net To contact the editor responsible for this story: John Fraher at jfraher@bloomberg.net

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