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5 "Tells" that the Stock Markets Are About to Reverse

UK Unemployment Falls Inline With Forecast Trend Expectations

Economics / UK Economy Jul 14, 2010 - 08:21 AM GMT

By: Nadeem_Walayat

Economics

Best Financial Markets Analysis ArticleThe previous Labour government's debt fuelled election bounce continues to have a positive impact on the UK economy as the number of unemployed for May fell to 2.47 million down by 34,000 in the three months to May. However whilst the ConLIb government may try and claim some credit from Labours lagging unemployment news, the headline figure masks several problem areas such as the rise in the long-term unemployed up by over 60,000 to 787,000.


The previous Labour government bent over backwards to prevent unemployment soaring during the recession in the run up to the General Election which caught many academic economists out who had been penciling in a rate of as high as 3.4 million by now. Instead Labour measures of boosting the public sector employment, enabling distressed companies delaying tax payments and a more flexible workforce that cut hours and days worked instead of becoming unemployed resulted in a far shallower rise in UK unemployment that came in remarkably close to my trend forecast of October 2008 that forecast a rise in UK unemployment to 2.5 - 2.6 million by April 2010.

UK Unemployment Forecast 2010-15

The ongoing downtrend in the headline unemployment figures is inline with the current trend forecast (01 Jul 2010 - UK Unemployment Forecast 2010 to 2015 ) for a dip into September 2010 which represents the calm before the storm to follow the implementation of the ConLib governments cuts of an estimated 500,000 public sector workers with an additional 500,000 private sector workers also destined to lose their jobs against which there is expected to be an increasing number of new business start up's employment. The job market remains tough for the unemployed with plenty of slack remaining in the economy as those forced to become part timers will be first in the queue during the economic recovery to regain full time employment rather than existing firms employing new workers. To illustrate this the number of part timers hit a record of 7.82 million.

On a positive development the number of those employed surged by 160,000. However as I explained in the UK unemployment forecast between 60% and 70% of new jobs will go to migrant workers, especially as workers from distressed euro zone PIGS such as Greece and Spain with soaring unemployment rates of over 20% will seek to gain employment in the far less distressed and more liberal UK jobs market. The figures show 160,000 jobs created against an unemployment drop of 34,000 points to a ratio of 79% which is precisely inline with the experience of the last Labour Government where 4 in 5 new jobs went to migrant workers.

Negative Average Earnings In Real Terms

The impact of the government's INFLATION stealth tax on workers and savers was further illustrated today as average wages increased by just 2.7% which is against CPI inflation of 3.2% and the more recognised inflation measure RPI at 5% which is implying a real terms cut in pay of 2.3%, with much worse to come as UK high inflation is expected to continue well into 2011 against low pay and for many people pay freezes continuing for several years therefore ensuring that the people of Britain will see their standards of living eroded by means of Inflation so as to finance government deficit reduction, total debt interest and the bailout of the banking sector.

Protect Your Savings and Wealth

The Inflation Mega-Trend Ebook (FREE DOWNLOAD) covers at length the whole on going theft of value of savings and wage purchasing power, but more importantly contains 50 pages of what people can do to protect their wealth.

If you keep your money in the bank or building society then you are letting the bankster's gradually steal the value of your savings as the rate of return to beat CPI inflation and the 20% savings tax will need to be about 4%, instead the banking sector typically offers depositors less than 2% for instant access accounts and less than 2.75% for 1 year fixes. The easiest and safest way for investors to protect themselves immediately is ironically a government backed product, the National Savings Index Linked certificates that pay 1%+ RPI Inflation that's 1% Plus 5% if inflation remains at 5% for the next 12 months. The actual formula is based on the RPI indices at anniversary against where it stood at the time of Purchase.

More advanced mechanisms for protecting your wealth such as investing in safe big cap cap dividend paying stocks, commodities such as oil and gold and silver and wheat which is particularly cheap at the moment, and other fiat currencies that are expected to appreciate in the long-run such as the Chinese Yuan, Aussie Dollar are covered at length in the Inflation Mega-Trend Ebook.

Bottom Line - You NEED to protect your wealth from the government and the Bank of England that will seek to steal the value of your wealth and earnings by means of INFLATION. The government has no choice but to print money and monetize debt. There is no other way out, yes there will be the occasional deflationary ripples but the worlds economies swim in an ocean of inflation as evidenced by the RPI and CPI Inflation indices which ensure the Inflation Mega-Trend will run not for months, or even years but decades.

Comments and Source: http://www.marketoracle.co.uk/Article21096.html

By Nadeem Walayat p[

http://www.marketoracle.co.uk

Copyright © 2005-10 Marketoracle.co.uk (Market Oracle Ltd). All rights reserved.

Nadeem Walayat has over 20 years experience of trading derivatives, portfolio management and analysing the financial markets, including one of few who both anticipated and Beat the 1987 Crash. Nadeem's forward looking analysis specialises on UK inflation, economy, interest rates and the housing market and he is the author of the NEW Inflation Mega-Trend ebook that can be downloaded for Free. Nadeem is the Editor of The Market Oracle, a FREE Daily Financial Markets Analysis & Forecasting online publication. We present in-depth analysis from over 500 experienced analysts on a range of views of the probable direction of the financial markets. Thus enabling our readers to arrive at an informed opinion on future market direction. http://www.marketoracle.co.uk

Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any trading losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors before engaging in any trading activities.

Nadeem Walayat Archive

© 2005-2018 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Comments

Raj
14 Jul 10, 17:28
House Prices

Hi Nadeem,

As always thanks for the articles,

When do you think you will be updating your graph for house prices into 2015?

Cheers


Nadeem_Walayat
14 Jul 10, 18:24
house prices

The aim is to arrive at that destination by mid August.


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