London, United Kingdom (4E) – The unemployment rate in the UK dropped unexpectedly to 7.4 percent in October, closing in to the Bank of England’s level that it will start considering increasing interest rates, a signal that the central bank may begin increasing borrowing cost sooner than expected.
In the three months through October, the number of people out of work dropped by 99,000 to 2.39 million, according to Office for National Statistics (ONS) data. The result surprised economists who had predicted no change from the 7.6 percent rate in September. British Prime Minister David Cameron said that the figures suggest that “the plan is working”.
The number of people applying for Jobseeker’s Allowance fell by 36,700 to 1.27 million in November.
Labour Party leader Ed Miliband said he welcomed the news but cautioned that more people are working part-time because they could not get the hours they need.
Average weekly earnings, which include bonuses, grew by 0.9 percent in the July to October period compared with a year ago, according to the ONS, improving slightly on the September quarter.
The subdued earnings growth raises doubts over the sustainability of the consumer-led economic recovery as Britons’ increased spending is eating into their savings.