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Olympics creates jobs, but mostly in London

Unemployment fell in Q2 but those claiming jobless benefits rose, ONS data showed

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Unemployment fell in the second quarter as the London Olympics created extra jobs, but the number of people claiming unemployment benefits rose slightly, official data showed on Wednesday.

In a rare bit of positive news from the struggling economy, the Office for National Statistics said the rise in employment and the drop in unemployment was concentrated in London, indicating that the Olympics, which start on 27 July, have created jobs.

The number of people without a job on the wider ILO measure dropped by 65,000 in the three months to May to 2.584 million.

The ILO jobless rate stood at 8.1 percent, compared with forecasts for an unchanged reading of 8.2 percent, the lowest rate since the May to July 2011 period.

Employment rose by 181,000 in the three months through May to 29.354 million, the highest level since September to November 2008 period.

Those on unemployment benefit, however, rose slightly more than forecast in June, but the ONS said on Wednesday a change in benefit rules may have contributed to the increase.

The number of people claiming jobless benefit rose by 6,100 last month. Analysts had forecast an increase of 5,000 on the month.

The ONS said that a change in benefit rules for lone parents may have driven up the number of people claiming unemployment benefits.

The jobs market has been surprisingly resilient so far given that the economy slipped into its second recession in four years around the turn of the year.

The Bank of England launched a fresh round of quantitative easing asset purchases earlier this month to boost the economy and the government announced a number of guarantee schemes to support investment spending.

The government has been relying on the private sector to create jobs to compensatte for the estimated 700,000 jobs it is cutting in the public sector as part of its austerity programme, aimed at erasing the country's huge budget deficit.


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