British unemployment rises for fourth month, hit by MG Rover collapse

British unemployment rises for fourth month, hit by MG Rover collapse
(Agencies)
Updated: 2005-06-15 22:40

LONDON - British unemployment rose for the fourth straight month in May as the collapse of automaker MG Rover -- entailing the loss of some 5,500 jobs -- impacted on the figures for the first time.

The number of people claiming jobless benefits increased by 13,200 from April to 855,300 people.

That included an increase of around 6,000 in the West Midlands, where the carmaker's Longbridge factory is based.

The fourth consecutive rise marked the longest spell of increases in the claimant count since December 1992, National Statistics said Wednesday.

More than 5,500 Longbridge workers lost their jobs when MG Rover called in administrators in early April, and the crisis has also cost thousands of jobs in companies which supplied the Birmingham-based company.

Work and Pensions Secretary David Blunkett cited the closure as the key reason for the size of the jobless increase.

"The Rover figures are included in the claimant count changes -- about half of the change in the claimant count is due to the Rover figures coming on stream," Blunkett said.

The unemployment rate was unchanged at 2.7 percent, remaining at its lowest level for 30 years.

The number of unemployed in Britain -- as measured by the internationally recognised International Labour Organisation -- fell by 15,000 to 1.395 million in the three months to April.

And the unemployment rate -- as measured by the ILO -- remained at 4.7 percent during the first quarter.

"All in all, a soft labour market report," concluded analyst Jodie Saul from the Canadian Imperial Bank of Commerce.

Data showed average earnings growth, excluding bonuses, rose by 4.1 percent in the three months to April compared with the same period the previous year. Average earnings growth was meanwhile 0.1 percentage points lower than the March rate.

The earnings data may ease concerns of the Bank of England that higher earnings may stoke wider inflationary pressures in the economy.

The BoE comfort level for earnings growth is set at 4.5 percent.

"The Bank of England will probably be reassured by these earnings figures, given that it has identified rising wages as a significant risk to the inflation outlook," said Global Insight economist Howard Archer.

"Nevertheless, an interest rate cut before the fourth quarter of this year currently remains unlikely," he added.