INSTANT VIEW - UK claimant count falls sharply in Feb

LONDON (Reuters) - The number of Britons claiming unemployment benefits fell unexpectedly last month and by the biggest amount since November 1997, official data showed on Wednesday.

However, the number of people in employment also fell to register its lowest level in four years.

The Bank of England's Monetary Policy Committee voted unanimously to keep monetary policy unchanged this month but some noted an increase in upside inflation risks from the fall in the pound.

ANALYSTS' VIEWS:

HETAL MEHTA, ERNST & YOUNG ITEM CLUB

"Today's data gives yet more weight to the idea that the labour market is performing better then the economy as a whole. It is unusual to see unemployment to fall at this stage of the cycle."

"Very low wage growth is also continuing to act as a prop to employment. In the absence of a rapid pickup in output, firms will need to maintain tight control over pay settlements if they are to continue to hoard labour and avoid a relapse in unemployment."

"Given our expectations that the recovery will be patchy, we would not be surprised to see some modest increases in unemployment in the next few months."

VICKY REDWOOD, CAPITAL ECONOMICS

ON JOBS DATA:

"The latest labour market data don't help to clear up any of the uncertainty about the economic outlook."

"On the plus side, the claimant count measure of unemployment started to fall again in February ... while January's rise was revised much smaller. But against that, employment fell sharply on both the LFS and Workforce Jobs measures."

"The rebound in pay growth was surprisingly modest given how the big drag on pay from lower bonuses was a year ago. We still think that the labour market will be a significant constraint on the wider economic recovery."

ON BOE MINUTES:

"The minutes of this month's MPC meeting confirm that the Committee remains in 'wait and see' mode."

"Admittedly, some members thought that the upside risks to inflation had increased slightly. But others thought that the balance hadn't changed and the minutes noted that inflation expectations remained contained."

JAMES KNIGHTLEY, ING

ON JOBS DATA:

"The ILO showed unemployment falling 33,000, but the important aspect to point out in this report is that actual employment fell even more - down 54,000 in the three months to January. As a result actual employment levels in the UK are at their lowest level since Jan 2006 ... As a result this report cannot be viewed very positively."

"Wage rates are also very soft -- we had been looking for better figures due to City bonuses, but it hasn't come through in the numbers."

"None of these figures are going to get substantially better anytime soon given the UK's poor productivity performance in this downturn and fiscal austerity, which will limit public sector pay and put downside risks on employment levels."

ALAN CLARKE, BNP PARIBAS

"I had expected unemployment to fall after snow disrupted the data in the previous month. If you look at the earnings data, there was a drastic drop in bonus payments a year ago and it looks like bonus payments have fallen again -- either that or banks are delaying paying bonuses to this month or the next."

GEORGE BUCKLEY, DEUTSCHE BANK

ON JOBS DATA:

"It is looking a bit better, claimant count falling both in the rate and also the level which reversed the surprising rise we saw the previous month. It just confirms the labour market has done better in this recession than we thought it would."

"You do tend to get this volatility of ups and downs around the turn in the cycle, it does look therefore that unemployment may well have peaked. There is a risk that it goes up further but the trend certainly seems to be improving. Some positive numbers at least."

ON BOE MINUTES:

"I don't think the minutes were too surprising, we were expecting that it was going to be 9-0 for both rates and QE, which turned out to be the case."

"I don't think things have materially changes between the inflation report and today, there has obviously been some surprises in the data but I'm not sure that they have been sufficient really to change their view and clearly that has been borne out in what they said in the minutes."

BRIAN HILLIARD, SOCIETE GENERALE

"The blip upwards in January was weather related and we were looking for a renewed fall but I am surprised by the size of the fall. It will renew expectations that unemployment has stabilised and could be on a downward trend."

"If unemployment really is stabilising, it raises doubts about the BoE's assumption that wage rates will bear down on core inflation."

(uk.economics@reuters.com, Tel: 44 207 542 5109))