UPDATE 3-UK jobless total rises for first time in 6 months

* First rise in jobless total and jobless rate in 6 months

* Public spending cuts mean more pain ahead

* Pound falls, gilts rise as economic outlook questioned
(Adds Cable’s comment)

By Christina Fincher and Peter Griffiths

LONDON, Dec 15 (BestGrowthStock) – The number of Britons out of
work rose for the first time in six months in the three months
to October, surprising analysts and raising doubts about the
economy’s resilience before big public spending cuts next
year.

The Office for National Statistics said the jobless number
on the internationally comparable ILO measure rose by 35,000 to
more than 2.5 million in the three months to October, the first
increase since the three months to April.

The jobless rate also rose for the first time in six months
to 7.9 percent, confounding expectations for a steady reading
of 7.7 percent.

Analysts questioned whether the recovery was robust enough
for the private sector to pick up the slack caused by the loss
of an estimated 330,000 public-sector jobs over the next four
years.

Business Secretary Vince Cable said in many respects the
economy was “on the mend,” pointing to recent manufacturing and
export data.

“There are enough indicators, I think, to suggest that we
are on the road to a private sector-led recovery, and we have
got to work now to strengthen that,” he told Sky News.

Economists said rising unemployment in 2011 will restrict
earnings growth, denting consumer spending but potentially
helping the Bank of England steer inflation back down to its 2
percent target.

Most analysts don’t expect the central bank to raise rates
from their record low of 0.5 percent until late next year at
the earliest, although the bank is prepared to inject more
stimulus if the recovery slows.

The pound fell against the dollar and UK government bond
futures rose on the figures, which contrasted with more upbeat
activity data in recent weeks.

“With employment falling, and more people reporting that
they cannot find full-time work, these data make the recovery
look a little more vulnerable,” said Hetal Mehta, economist at
Daiwa Capital Markets Europe.

The narrower measure of people claiming unemployment
benefit fell by 1,200 in November, less than half the fall
expected, though this was mitigated by a revision showing a
much bigger drop in claims than previously reported in
October.

A separate survey by the Confederation of British Industry,
which showed UK retail sales rising at the fastest pace in over
eight years, suggested consumers have yet to rein in spending.

But analysts said consumers may be bringing forward
purchases ahead of January’s rise in VAT, and questioned
whether that strength would continue.

The CBI distributive trades survey’s December sales balance
rose to +56 from +43 in November, the highest index level since
April 2002.

“The concern remains that consumers will limit their
spending in 2011 in the face of serious headwinds,” said Howard
Archer of IHS Global Insight. “Consumer confidence is currently
low, while the substantial fiscal squeeze will increasingly hit
public sector jobs and consumers’ pockets.”

BoE Deputy Governor Charles Bean said earlier this week the
central bank may need to inject more stimulus if the euro zone
debt crisis starts to have a big impact on the UK economy,
although data on Tuesday showing an unexpected rise in
inflation may tie the bank’s hands.

Still, Wednesday’s data showed little sign that
above-target inflation was triggering a wage-price spiral.

Average weekly earnings growth rose by 2.2 percent in the
three months to October, the fastest rate since May but well
below consumer price inflation, which is running at 3.3
percent. Excluding bonuses, earnings rose by 2.3 percent.

Brian Hilliard at Societe Generale said the wage figures
were an antidote to the recent high inflation numbers.

“It’s earnings growth that counts, and that’s under
control,” he said.
(Additional reporting by Fiona Shaikh and Avril Ormsby,
Editing by Ruth Pitchford/Catherine Evans/Padraic Cassidy)

UPDATE 3-UK jobless total rises for first time in 6 months