UK joblessness falls unexpectedly, pay rises slow

The number of Britons out of work fell at the fastest pace in nearly a year in the three months to March, official data showed on Wednesday, pointing to some underlying resilience in the economy.

Britain slipped back into recession at the beginning of 2012, stoking fears that more people will become unemployed at a time when the government is relying on private firms to make up for the estimated 700,000 jobs it is shedding in the public sector as part of its austerity plan.

The Office for National Statistics said the number of people without a job on the ILO measure fell by 45,000 in the three months to March to 2.625 million.

The jobless rate inched down to 8.2 percent, compared with forecasts for an unchanged reading of 8.3 percent.

The number of people claiming jobless benefit unexpectedly fell last month by 13,700 - the largest drop since July 2010. Analysts had forecast an increase of 5,000 on the month.

In addition, the March figure was revised to show a drop of 5,400 in claimants from an initially reported rise of 3,600.

The figures support a relatively upbeat assessment of the economy by Bank of England Governor Mervyn King, who is nonetheless expected to leave the door open for more quantitative ea sing when he presents the central bank's new economic outlook later on Wednesday.

Average weekly earnings growth including bonuses slowed to 0.6 percent - the smallest rise since October-December 2009 - versus forecasts for a rise of 1.0 percent.

However, excluding bonuses, pay grew by 1.6 percent, slightly above expectations for a 1.4 percent increase.

The politically sensitive number of young people without a job dipped to 1.020 million in the three months to March, taking the unemployment rate for 16- to 24-year-olds to 21.9 percent.

Chiming with the better data, a senior executive at John Lewis, Britain's biggest department store, told Reuters a slow, steady recovery of the British economy was on course, a nd the group was optimistic about its own business.

Moreover, British employers plan to increase staffing for the first time in a year, a survey for the Chartered Institute of Personnel and Development showed earlier this week.

However, the CIPD warned that a zigzagging economic backdrop" could make it hard to sustain any short-term recovery in the labour market.

(Reporting by Sven Egenter and Olesya Dmitracova)

©Reuters