Wednesday, April 21, 2010
Job numbers benign, Bank getting a little twitchy
Posted by David Smith at 01:30 PM
Category: Thoughts and responses

It was always going to be difficult to get through the winter without a rise in unemployment, and so it proved. For the claimant count it was a rise in January, while for the Labour Force Survey measure it was the December-February period, which saw an increase in unemployment of 43,000 to 2.5m, the highest since December 1994. Employment fell by 89,000 over the period.

The more timely claimant count numbers have proved to be a better guide to trends during the recession, however, and their 32,900 drop to 1.54m, the fourth fall in five months, tells us that unemployment is still trending gradually lower, once winter effects have dropped out. The claimant count is running at roughly half its level following the past two recessions, confirming that labour market outcomes in this recession have been better. More here.

How twitchy is the Bank of England about higher than expected inflation? Not enough to contemplate an early hike in interest rates but a few doubts are creeping in. Certainly, it would be very odd if the Bank was as open to the prospect of more quantitative easing as in February.

The April minutes say: "Given that a period of above-target inflation was in prospect at a time when monetary policy was exceptionally accommodative, this was a source of concern to some members. The Committee would continue to monitor developments in inflation expectations closely." The minutes are here.