UK unemployment edges down in January quarter

LONDON (AP) - Unemployment in Britain dropped to 7.8 percent in the three months through January from the previous quarter's 7.9 percent, the first such decline since May 2008 as the economy emerged from recession, official statistics showed Wednesday.

The number of unemployed fell by 33,000 during the quarter to 2.45 million, the Office for National Statistics said. But in a contrary signal about the state of the national economy, the number of people in work fell by 54,000.

On a monthly basis, the unemployment rate for January was unchanged from December's rate, although the number of people claiming benefits decreased by 32,300 between January and February, the largest monthly fall since November 1997.

The report gave a boost to the pound sterling, which rose to a three-week high of $1.5350.

"The latest labor market data don't help to clear up any of the uncertainty about the economic outlook," said Vicky Redwood, economist at Capital Economics.

While unemployment fell during the quarter through January, she noted the drop in the number of employed.

"We suspect the labor market may well be somewhat erratic in the near term at least, with some months of unemployment gains and some of losses." said Howard Archer at IHS Global Insight.

"There remains the risk that unless the economy gains significant momentum in the near term, a significant number of firms may well decide that they really cannot hold on to some of their workers any longer."

Prime Minister Gordon Brown's office said the number of Britons out of work for 12 months or more - up 61,000 to 687,000 - was worrisome.

"Clearly long term unemployment is something of a concern, but I think that government policies, as far as possible, are seeking to provide opportunities for training and employment," Brown's spokesman Simon Lewis said.

Uncertainty about the labor market and the the course of economic recovery were key factors in the Bank of England's unanimous decision earlier this month to keep its base rate at an all-time low of 0.5 percent and to refrain for now from further fiscal stimulus, according to minutes of the Monetary Policy Committee's meeting released Wednesday.

The committee believed that several factors would impede growth.

"The banking sector remained impaired, holding back the growth of both broad money and credit," the minutes said.

"A significant fiscal consolidation was needed in the United Kingdom, the precise nature and pace of which remained uncertain. And a weakening in the prospects for growth in some of the United Kingdom's main trading partners, amid growing concerns about the fiscal position in some countries, particularly in the euro area, would weigh on the outlook for U.K. exports."

Britain's economy grew by 0.3 percent in the fourth quarter, ending six quarters of recession.

Elsewhere, the British Retail Consortium reported that sales in London bounced strongly in February after a subdued and stormy January.

Sales in central London were up 9.9 percent on a comparable stores basis in February, compared to a 3.4 percent rise in January, when cold and snowy weather depressed trade.