LONDON (Reuters) - The number of Britons claiming unemployment benefits posted its sharpest increase in over a year in October after a jobs boost from the Olympics faded, data showed, highlighting the fragile health of the economy.
Britain has just exited recession in the third quarter and weak business surveys have since raised fears of a relapse.
The number of people claiming jobless benefit rose by 10,100 last month, the largest increase since September 2011, the Office for National Statistics said on Wednesday. Analysts had forecast an unchanged reading.
The number of people without a job on the wider ILO measure fell by 49,000 in the three months through September to 2.514 million. The jobless rate dipped to 7.8 percent, compared with forecasts for a reading of 7.9 percent.
However, the ONS said the surveys showed a monthly increase from August to September by 53,000, though the statisticians warned not to read too much into this experimental set of figures.
While the ONS had no direct anecdotal evidence that people lost jobs after the end of the Olympics and Paralympics, which took place in August and September, the statisticians said the claimant count rose in London in the last two months.
The resilience in Britain’s labour market has been a puzzle for most economists and the Bank of England, who are wondering how such a weak economy can create jobs.
Recent surveys have given a mixed picture: The purchasing managers’ index polls showed that manufacturers and service providers planned to reduce headcount.
But a survey by the Recruitment and Employment Confederation showed that permanent job placements rose at the fastest pace in 17-months in October.
The mixed labour market news complicates the job of Bank of England policymakers after they decided against another cash boost for the economy last week.
The rise in people claiming jobless benefits also makes uncomfortable reading for Chancellor George Osborne, who has been under pressure to ease his flagship programme to reduce the budget deficit when he presents new borrowing forecasts and budget plans next month.
The latest ONS data also showed that many Britons still faced a severe squeeze of their finances.
Average weekly earnings including bonuses grew by 1.8 percent in the three months through September. Analysts had forecast a rise of 1.9 percent. Excluding bonuses, pay was 1.9 percent higher.
Both figures were below inflation, which jumped to 2.7 percent in October.
Reporting by Sven Egenter and Peter Griffiths