UK jobless rate dips as economy enjoys “sugar rush”

A report on Wednesday showed that Britian's unemployment rate fell to 7.7 percent in the three months ending July, the lowest since the September-November 2012 period. The number of people claiming jobless benefit fell by 32,600 in August after having fallen by 36,300 in July, the steepest decline since June 1997.

The latest data add to other recent reports of strength in the UK economy. From Reuters:

Hailed on Monday as a “turning point” by Chancellor George Osborne, economic indicators out of the UK have surpassed even the most hopeful analysts' expectations over the last two months.

Surveys showed business activity in Britain rose last month at a pace unmatched by any of its major G20 peers, a huge contrast to the early part of the year when there was widespread talk of a “triple dip” recession...

“I think we are quite heavily reliant on a hair-of-the-dog prescription for the UK economy, and there's more debt-fuelled consumption,” said Philip Rush, UK economist at Nomura...

“I think we have entered a new upward trend for the UK economy, and in that respect what we have is sustainable for at least a few years,” said Rush.

Not everyone thinks this can be sustained though.

“We're enjoying a sugar rush at the moment,” said Alan Clarke, director of fixed income strategy at Scotiabank in London, citing pent-up demand in the housing market and government stimulus to improve access to it.

“I don't think that continues forever. We won't be seeing people increasing their spending in excess of their disposable incomes next year, which is what they're doing right now. So we're on borrowed time on that front,” he said.