Higher rates

Rates should now be seen getting pushed higher, if you forget the credit crunch. The Labour Market Survey has thrown up figures that reveal employment had risen by 114,000 in the 3 months to October. This proves that the economy is  generating an extra half a million jobs a year.

Government figures, on the other hand, show that the Unemployment Rate (or at least the Claimant Count which is a little different) is down to only 2.5%.

This is the lowest Claimant Count since 1975 – when Harold Wilson was still Prime Minister.


Good News

It must be pointed out that different Governments have changed the counting on unemployment several times, but apparently, the Claimant Count is doing a reasonable comparison. It does match with the Labour Market figures which show an encouraging rise in  the number of jobs.


Considering the fact that IT permie unemployment rate is well below the national rate, this would lead to a situation where companies would find it difficult to recruit IT permies.  Then we should be getting a real squeeze on the market.


Higher Rates

Companies would eventually turn to IT Contractors and this would squeeze rates even more. Whilst this may be happening, companies will now have options other than IT Contractors available to them. Alternatives could include sending work offshore, bringing people onshore, hiring from Eastern Europe or outsourcing their IT capability.


But the credit crunch looming large on the corporate skyline is creating a highly unfavorable situation for companies to borrow money and survive in a high interest rates environment which make it more expensive to do so.


The effect of the credit crunch in terms of its hit on the economy and the IT Contractor market is  awaited. 


However, for those who are in work, it is heartening to know that the lowest unemployment rate is more than 30 years.