Europe News

UK unemployment rose at end of 2013

UK unemployment rate edges up to 7.2%

The U.K. unemployment rate rose in the three months to December, bringing to a halt the recent sharp declines in the country's jobless figures. .

The unemployment rate edged up to 7.2 percent compared with 7.1 percent in the three months to November, according to the Office for National Statistics. The number was higher than a forecast of 7.1 percent in a Reuters poll, although the ONS said the number of people claiming jobless benefits fell by 27,600 in January.

Indeed, an unemployment rate of 7.2 percent is still down 0.4 percentage points compared to the July to September 2013 period.

(Read more: BoE's Carney unveils 'next phase' of forward guidance)

Investors are not as concerned with the unemployment rate in the U.K. since the revision of the Bank of England's (BoE) forward guidance.

Last summer, Carney said that only once the unemployment rate hit 7 percent would the BoE look to hike interest rates. He predicted that threshold would be reached in 2016, yet the rate had already fallen to 7.1 percent in the three months to November.

(Read more: UK economy records fastest growth in 6 years)

Today's slight increase does bolster the bank's message that there was no need to rush a raise of interest rates.

The BoE left monetary policy unchanged this month and Carney said last week that the bank will only start to increase interest rates when a broad range of measures suggest the economy is operating at closer to full capacity.

(Read more: 'Absolute core' of UK economy hit by storms)

The figures from the ONS were revealed at the same time as the minutes from the latest BoE Monetary Policy Committee were released which showed that policy makers showed no disagreement about the changes to the bank's forward guidance.

"Despite the sharp fall in unemployment, the Committee judged that there remained scope to absorb spare capacity further before raising Bank Rate," the minutes said.

According to the ONS, average weekly earnings growth rose by 1.1 percent in the three months to December 2013 compared with the same period in 2012, but that was lower than an annual inflation rate of 1.9 percent in January.

Responding to the figures, Duncan Wheldon, senior economist for the Trades Union Congress (TUC), tweeted: "Overall a decent set of labor market stats, not as strong as recent months but much better than a year ago. Long way to go to normal."

Jonathan Portes, the director of the National Institute of Economic and Social Research, saw a "picture of a sustained improvement in the labor market - but unemployment remains well above pre-crisis levels, so there is a long way to go".

While the UK.'s 7.2 percent rate is lower than the European Union's 10.8 percent unemployment rate, it is higher than the U.S. which has a 6.7 percent jobless rate. Markit Economics tweeted a graph comparing the current unemployment rates in the U.K., U.S. and the European Union:

Markit Graph