By Svenja O'Donnell
July 15 (Bloomberg) -- U.K. unemployment claims rose the least in a year in June, adding to evidence that the worst of the recession may have passed.
Jobless benefit claims climbed from May by 23,800 to 1.56 million, the highest level in 12 years, the Office for National Statistics said in London today. The median forecast of 29 economists in a Bloomberg News survey was 41,300. Overall unemployment in the quarter through May increased by 281,000, the most since records began in 1971.
Prime Minister Gordon Brown is trying to extricate Britain from its worst economic contraction in five decades as he attempts to win an election due within the next year. Reports yesterday showed Britain's housing market improved last month and retail sales increased from a year earlier, evidence the economy is easing out of its slump.
``The economy is no longer shrinking at the pace it was in the first quarter,'' said James Shugg, an economist at Westpac Banking Corp. in London. ``It seems we've managed to avert economic and financial Armageddon. We are forecasting economic growth next year but not enough to generate jobs growth.''
The claimant-count increase on the month was the smallest since May 2008, the statistics office said. Overall unemployment, measured by International Labour Organization standards, rose to 2.38 million, the most since 1995. The British Chambers of Commerce said last week that unemployment may reach 3.2 million by the middle of next year.
ILO Rate
The jobless rate on the ILO measure was 7.6 percent, the statistics office said. That compares with 9.5 percent in the U.S. and the euro region, and 5.2 percent in Japan.
British Airways Plc said yesterday that it must push through job and pay cuts for the airline to survive the recession. Corus, Europe's second biggest steelmaker, may shed as many as 366 workers at a factory in Northeastern England.
Brown, who faces an election by next June, has seen voters' support dwindle as the recession gathered pace. The opposition Conservative Party leads the ruling Labour Party by a 16 percentage-point margin, according to a YouGov Plc poll published in the People newspaper on June 28.
Gross domestic product fell 2.4 percent in the first quarter. The pace of decline probably slowed to 0.4 percent in the second quarter, according to the National Institute of Economic and Social Research.
Housing Market
The housing market improved last month as more real-estate agents and surveyors in London said prices rose than fell, the Royal Institution of Chartered Surveyors said yesterday. Same- store retail sales increased 1.4 percent from a year earlier, the British Retail Consortium said.
Bank of England Deputy Governor Charles Bean said this week that the recession has probably reached a bottom. He told BBC Radio Leeds that the economic recovery may be a ``long haul'' and it's ``inevitable'' that unemployment will keep increasing.
Hays Plc, the U.K.'s largest recruitment company, said last week it will freeze pay for all staff including executives after the amount of fees it collected declined at an increasing rate.
The prospect of further job losses is keeping wages down. Average earnings in the three months through May rose 2.3 percent from a year earlier, the statistics office said. Excluding bonuses, earnings grew 2.6 percent, the least since records began in 2001.
The Bank of England last week stuck to its plan to spend 125 billion pounds ($204 billion) in newly printed money on assets as it fights the threat of deflation. The next decision will be on Aug. 6.
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