Claimant count debate on @FTAlphaville

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Last Friday, FT Alphaville blogged about 'A claimant count quandry', flagging up the debate on why the claimant count rose in last Wednesday's labour market data.

Howard Archer of IHS global Insight is quoted as saying:

"The 19,600 spike up in May in the more timely claimant count measure of unemployment is worrying, as it cannot be fully put down to recent changes in the benefits system. This is the third successive rise in claimant count unemployment."

Philip Rush of Nomura, however, suggests the rise is all down to recent changes in the benefit system:

"But the relatively bleak performance on the claimant count measure is largely the result of classification issues. Specifically, since 25 October 2010, lone parents with children aged 7 or over became eligible to claim jobseekers allowance instead of income support."

Further down in the comments section, I post my view, which says that claimant count rise is because a sharp drop in outflows from JSA due to reduced vacancies in the public sector:

"So the rise in the Claimant Count could be due to reducing outflows as the jobless have fewer temporary government/census jobs to lean on. It also means that the private sector isn't taking them on as fast as needed to get outflows up to level needed (around 350k+) to begin pulling the claimant count down to pre-recession levels (the pre-recession average was about 884k on the Claimant Count, compared with 1.49m now)."

Finally, Paul Bivand from the Centre for Economic and Social Inclusion, seconds my view on outflows:

"If the claimant count change was being driven by people transferred from other benefits, new claims would have risen not fallen...the problem is outflows falling. ...Employment is at best stable, monthly figures slightly down on previous. The unemployment fall (in month) almost wholly due to young people transferring to inactivity. The quarterly rise in employment and earlier fall in unemployment largely due to the difference between Nov-Jan and Feb-Apr, with a big snow component."

The labour market, just like the rest of the economy has been affected by the weather (good and bad) and the funny holiday season in April.

And just like the rest of the economy, the concern is that the underlying health of the labour market isn't as strong as it could be.


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