Mixed British unemployment data will push the Bank of England into maintaining record-low interest rates for a few more months, amid uncertainty over the faltering economy, according to analysts. Britain's unemployment rate and jobless total fell in the first quarter of the year, but the number of people claiming benefits rose between March and April, the Office for National Statistics (ONS) said.
Also on Wednesday, the Bank of England revealed that its monetary policy committee (MPC) voted 6-3 in May to keep interest rates at a record low level of 0.50 percent, as it balanced high inflation and anaemic economic recovery. "May's MPC minutes and the latest labour market data have done little to... the interest rate outlook," said economist Jonathan Loynes at consultancy Capital Economics. The ONS announced that the unemployment rate fell unexpectedly to 7.7 percent in the first quarter, from 7.8 percent during the final three months of 2010.
Market expectations had been for an unchanged reading of 7.8 percent between January and March. And, while the jobless total fell by 36,000 to 2.46 million people in the first quarter, the ONS added that the number of people claiming jobless benefits increased by 12,400 between March and April to reach 1.47 million. "Today's labour market figures are in truth unlikely to challenge the perception of fairly static conditions across the labour market," said HSBC economist Stuart Green. Britain is still struggling to recover from recession amid the coalition government's deep spending cuts, while weak economic growth has caused the Bank of England to avoid a rate hike despite soaring consumer price inflation.
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