Unemployment reaches five-year high (CORRECTED)
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Your support makes all the difference.CORRECTION (PUBLISHED 15 AUGUST 1992) APPENDED TO THIS ARTICLE
Unemployment rose more sharply than expected last month, while a surprise increase in June factory output went some way to allay fears that manufacturing industry is sliding back into recession.
The jobless total rose by 29,100 in July to top 2.75 million for the first time in five years, after adjusting for seasonal factors, the Department of Employment said. Although larger than the average City forecast, the increase fell short of the 40,000 rise feared by some economists.
The 0.2 per cent increase in manufacturing production in June confounded expectations that output would be flat.
Output was half-a-percent higher in the second quarter than the first. This was the second consecutive quarterly gain in output, after successive falls since the manufacturing recession began in the second quarter of 1990. The Central Statistical Office also revised upwards its estimates of output in April and May.
The calculation of the June figures preceded the July Confederation of British Industry's Regional Trends Survey, which indicated that manufacturing industry saw no end to recession in the next few months and suggested a weaker third quarter may lie in store.
Despite these conflicting signals, the Treasury said the figures were quite encouraging. 'This is a distinct sign that things are getting better,' a Treasury official said.
'These figures provide quite strong arguments against all the pervasive gloom and doom.'
No such interpretation was to be found in the City, where analysts expressed concern about a weaker third quarter.
The rise in output in the second quarter was led by food, drink and tobacco producers, largely reflecting the impact of good weather in May and June on demand for drinks. Higher production was also recorded by engineers and the paper, printing and publishing industries.
Offsetting these were falls in chemicals and metals production. The decline in metals output was due chiefly to the closure of the Ravenscraig steel plant and maintenance at the Port Talbot steel works.
The CSO said it was doubling its estimate of the underlying trend rate of growth in manufacturing to an annual 1 per cent. However, the improved trend reflects a sharp pick-up in February from depressed production levels in January.
The trend could easily slip back once January figures drop out of the calculation.
Energy output fell 0.2 per cent in June and was down 2.1 per cent during the quarter, after a fall in North Sea oil production swamped the positive impact of higher electricity output.
Although the July rise in unemployment was disappointing, the rate of increase still appears to be slowing. The jobless total has risen on average by 19,400 in each of the past three months, the lowest figure for almost two years.
Department of Employment officials estimate that the trend increase is 20,000-25,000 a month.
'The rate of increase is continuing to decline, but we still expect unemployment to rise throughout next year to around 3.1 million,' Simon Briscoe, economist at Midland Montagu, said.
Some 2,753,400 people are out of work and claiming benefit, equivalent to 9.7 per cent of the workforce. Unemployment rose in all regions, with the biggest increases in London and Northern Ireland.
Analysts were cheered by a fall of 2,000 in the numbers employed in manufacturing industry in June to 4,520,000, the smallest decline in two years.
Available positions notified to JobCentres rose by 1,300 in July to 110,800.
BENEFITS FOR THE UNEMPLOYED
Single person, over 25, working for at least two years, rent of pounds 50 a week
Unemployment benefit of pounds 43.10 a week for 12 months
Thereafter income support of pounds 42.45 a week
Plus housing benefit of up to pounds 50 a week, depending on savings etc
Married person, spouse earning pounds 20,000, rent of pounds 150 a week
Unemployment benefit of pounds 43.10 a week for 12 months
No income support thereafter because spouse working
Probably no housing benefit because spouse working
Married person, spouse not working, rent of pounds 100 a week
Unemployment benefit of pounds 75.65 a week
Thereafter income support of pounds 66.60 a week
Housing benefit of up to pounds 100 a week
Married person, spouse not working, pounds 60,000 repayment mortgage
Income support of pounds 66.60 a week for 16 weeks (plus half mortgage interest payments) tops up unemployment benefit to pounds 314.35
Thereafter pounds 66.60 plus entire mortgage payments making pounds 562.10 a week
People on low incomes may also be entitled to Community Charge Benefit, money from the Social Fund or help with NHS costs
CORRECTION
Benefits for an unemployed person with a pounds 60,000 mortgage and non-working spouse would be around pounds 125 a week for the first 16 weeks and about pounds 180 thereafter, not as reported in yesterday's Independent.
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