Unemployment falls - again

It was a surprise, but unemployment has fallen again.  The unemployment rate is 7.8% in the three months to January.  The number of people claiming Job Seekers Allowance fell by just over 36,000 last month.

Economic commentators have been struggling to find the words to explain this today because the expectation was that unemployment would rise.  It still might rise further from here.

Some believe unemployment will rise because spending cuts will mean public sector job losses.  While job losses in that sector is a risk but the timing is important.  Spending cuts (even if extra cuts are announced in the summer) will take some time to take effect, by which time the recovery may be leading the private sector to create more jobs.  So the net effect may be muted.  Saying that in no way underestimates the hardship people face when losing their jobs or when their jobs are under threat.  That goes to underline that the country needs a pro jobs government - there will be a clear choice on this at the election.