North jobless rises by 15,000 – or maybe not

Jun 12 2008 by William Green, The Journal

OFFICIAL figures indicating a 15,000 jump in the number of people unemployed in the region were yesterday branded “unbelievable” in such a “robust” economy.

The Office for National Statistics (ONS) said 88,000 people were unemployed in the North East between February and April this year, up 15,000 on the previous quarter.

Unemployment rose by 6,000 between February and April when compared to the same period last year, according to the agency.

The UK unemployed total rose 38,000 to 1.64 million between February and April – the biggest quarterly jump since July 2006. It edged up the national unemployment rate for the first time since May 2006 – by 0.1% to 5.3%.

But the ONS sparked incredulity last night after admitting the figures were subject to a huge margin of error – sparking business warnings about the impact on regional economic decisions and confidence. The statistics are calculated using a “labour force survey” based on a sample of approximately 53,000 households every three months across the UK.

The ONS said such surveys are subject to “sampling variability” – a margin of error – which is greater in smaller regions. A spokesman said the regional quarterly and annual unemployment changes were within most recent estimates of the margin of error of 17,000 either way.

Last night Ross Smith, from the North East Chamber of Commerce, said economic conditions had become more difficult but stressed there was little on the ground to suggest such an unemployment hike.

“Obviously, it is a key factor in determining regional economy policies. It is an issue that the North East is a smaller region and so when you have statistics based on a sample of interviews, they don’t always show an accurate picture,” he added. Regional CBI director Sarah Green said it was vital for official statistics to “stack up”, with firms making difficult investment decisions.

“We could unnecessarily talk ourselves into a recession,” she added.

Tyne Bridge MP David Clelland acknowledged pressure on jobs from rising costs – including fuel – but blasted the “unbelievable” margin of error in the ONS figures. “Everything I read and everything I hear from the business sector in the North East seems to suggest that the economy is quite robust,” said the Labour MP.

Paul Mooney, chief economist of development agency One NorthEast, said there was “no doubt” the slowing economy was affecting the labour market and any rise in recorded unemployment was disappointing.

But he confirmed the agency had queried the “particularly high” figures as they were not in line with other data and warned longer-term trends should be considered.

“The region is fortunate to be facing the slowing global economy after a strong and sustained period of growth, and it’s important to remember that when looking at the last 12 months, levels of employment and unemployment in the region are broadly unchanged. The number of vacancies available increased this month.”

CREDIT CRUNCH BITES

JOB losses in the financial services and manufacturing sectors helped fuel the biggest rise in unemployment in nearly two years, economists said yesterday.

The number of unemployed people in the UK jumped 38,000 to 1.64 million between February and April.

Although unemployment data is not broken down by job sector, data from the Office for National Statistics showed that the manufacturing and financial services industries have shed by far the most jobs so far this year, 11,000 and 20,000 respectively during the first quarter.

Tens of thousands of redundancies have been forecast in the City as banks and other lenders rein in their activity due to the credit crunch.

In a sign of wider job market pressure amid the economic slowdown, the number of people claiming Jobseeker’s Allowance also rose for the fourth month in a row, increasing by 9,000 last month to 819,300.

However, the number of people in work increased by 76,000 in the three months to March to 29.55m, a record high and reflecting an increase in the working age population. But the rate of increase in the employment level has slowed over recent months, with the recent 76,000 rise comparing to an extra 117,000 during the quarter to February and 152,000 immediately preceding.