At one stage, it looked as if official unemployment statistics could rise close to 3 million. So yesterday's unemployment figure of 2.641 million suggests the worst may be over. There was a small monthly fall in unemployment. This meant a 3 month rise of just 8,000 - the smallest increase since the recession began. It is encouraging because unemployment is often a lagging indicator - which means that usually unemployment continues to rise even during recovery. A fall in unemployment at this stage is very welcome.
Combined with improving consumer confidence and growing manufacturing output, it gives more credence that last months GDP statistics were wrong and underestimated GDP
In fact many traders and economists are convinced the recession is over and GDP statistics are misplaced
Chris Williamson, the chief economist at Markit, which produced several surveys showing positive economic signs, insisted that the ONS data was wrong. He said: “We think the numbers are wrong. A whole host of indicators other than ours show that the economy grew in the third quarter, powered by a stronger services sector. There is a risk that these figures could lead to disastrous policy mistakes. The ONS has always found measuring the services sector difficult.”
However, as Governor of Bank of England suggests, even a modest recovery is no cause for '"bunting and celebration". Output is still 6% below 2008 peak. Firms and consumers will be engaging in a balance sheet recovery. In other words, we are still trying to repair our past debts hampering spending and investment.
Also, one of the fundamental causes of the recession - the credit crunch - is still hampering business and firms. Banks are still reluctant / unable to lend and are relying on intervention by Bank of England.