UK Jobless Data....Disappoints!

Most people's focus today is on George Osborne and the UK Budget but there is also other important data out today; UK Jobless Data. So what is UK Jobless Data? It is a measure of the number of people who claim unemployment benefits but are actively seeking work. The figure serves as a useful barometer for the state of the UK labour market and can be a good forward indicator for UK economic growth.  

The absolute figure released today showed claims had fallen by 1,500 - a positive. However, the forecast was for a fall in claims by 5,000 so the number has disappointed in terms of analysts estimates. 

So how could this number be interpreted? One could argue that the economy is stalling and that people are not moving into work fast enough. If unemployment remains stubbornly high it drags on the economy; the UK government has to fund the unemployed through welfare payments and also misses out in potential income tax revenues. A more bullish investor may find solace in the fact that people are finding work, hence a decline in the number - it may be slow but the economy is on the right path.

For policy makers, I suspect the likely implication is that this number helps highlight the precarious state of the UK economy and may encourage the BoE to consider expansionary policies, such as further Quantitative Easing. This would be supportive of equity markets, but I suspect weaken Sterling (inflation and currency) could lead to further inflationary pressures.

So it seems there has been job creation in the UK recently, but this has lagged market expectations - is it time for further policy measures targeted specifically at employment? The U.S undertook similar policy which so far seems to have worked well...