5,000 City jobs go in first credit crunch effects
Ashley Seagar
Signs that the credit crunch is taking its toll on City jobs emerged yesterday as official data showed the first fall in financial sector employment in nearly six years.
The Office for National Statistics reported a drop of 5,000 jobs in the financial and business services sector in the final quarter of last year but acknowledged that the bulk of those were in finance. With the credit crunch having worsened since then, analysts expect many more City jobs to be shed this year.
That reported was the first drop since the second quarter of 2002, bringing an end to a period of growth in which nearly one million jobs were created. In spite of the latest fall, the sector added 150,000 jobs during 2007.
There was another hint in the data that the good run of falling unemployment and rising employment over the past couple of years may be coming to an end. The claimant count measure of joblessness fell by 2,800 in February from January - the smallest fall in the 17 months since unemployment began to drop.
Labour market figures are said by economists to react well after the economy has slowed or speeded up. Most expect economic growth to halve this year from the 2007 figure of 3.1% and that is likely to have an effect on the broader jobs market.
The report also showed that employment remained at a record high of 29.46 million in the three months to January, up 166,000 on the previous three months. Similarly, the broader measure of unemployment, known as the labour force survey, fell 32,000 to 1.61 million, 5.2% of the workforce.
The chancellor, Alistair Darling, said the jobs numbers were a sign that the economy was proving resilient to the effects of the credit crunch. He acknowledged that the economy faced "downside risks" from the credit market turmoil but added: "The British economy will continue to grow throughout this period of global uncertainty."
Growth in average earnings slowed to 3.7% in the three months to January, the lowest since last August. "This suggests that even if workers are seeking to compensate for the rise in the cost of living by demanding higher wages, they are not succeeding in getting them," said Janet Henry, economist at HSBC.
The data also showed that public sector employment rose for the first time in two years in the fourth quarter, to 5.78 million, pushed up 7,000 by the inclusion of Northern Rock's 6,000 employees and more jobs at an unnamed public corporation.
Separately, the CBI reported that industrial orders were strong last month, boosted by healthy demand from overseas, possibly helped by falls in the pound.
The CBI's latest survey of the sector showed firms determined to pass on price rises for raw materials. The survey's prices index rose to its highest level since 1995, something economists said would worry the Bank of England as it considers cutting interest rates.
Signs that the credit crunch is taking its toll on City jobs emerged yesterday as official data showed the first fall in financial sector employment in nearly six years.
The Office for National Statistics reported a drop of 5,000 jobs in the financial and business services sector in the final quarter of last year but acknowledged that the bulk of those were in finance. With the credit crunch having worsened since then, analysts expect many more City jobs to be shed this year.
That reported was the first drop since the second quarter of 2002, bringing an end to a period of growth in which nearly one million jobs were created. In spite of the latest fall, the sector added 150,000 jobs during 2007.
There was another hint in the data that the good run of falling unemployment and rising employment over the past couple of years may be coming to an end. The claimant count measure of joblessness fell by 2,800 in February from January - the smallest fall in the 17 months since unemployment began to drop.
Labour market figures are said by economists to react well after the economy has slowed or speeded up. Most expect economic growth to halve this year from the 2007 figure of 3.1% and that is likely to have an effect on the broader jobs market.
The report also showed that employment remained at a record high of 29.46 million in the three months to January, up 166,000 on the previous three months. Similarly, the broader measure of unemployment, known as the labour force survey, fell 32,000 to 1.61 million, 5.2% of the workforce.
The chancellor, Alistair Darling, said the jobs numbers were a sign that the economy was proving resilient to the effects of the credit crunch. He acknowledged that the economy faced "downside risks" from the credit market turmoil but added: "The British economy will continue to grow throughout this period of global uncertainty."
Growth in average earnings slowed to 3.7% in the three months to January, the lowest since last August. "This suggests that even if workers are seeking to compensate for the rise in the cost of living by demanding higher wages, they are not succeeding in getting them," said Janet Henry, economist at HSBC.
The data also showed that public sector employment rose for the first time in two years in the fourth quarter, to 5.78 million, pushed up 7,000 by the inclusion of Northern Rock's 6,000 employees and more jobs at an unnamed public corporation.
Separately, the CBI reported that industrial orders were strong last month, boosted by healthy demand from overseas, possibly helped by falls in the pound.
The CBI's latest survey of the sector showed firms determined to pass on price rises for raw materials. The survey's prices index rose to its highest level since 1995, something economists said would worry the Bank of England as it considers cutting interest rates.
Labels: City of London, layoffs, United Kingdom
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