Experts wary despite jobless unemployment drop

Unemployment fell in the first three months of the year but economists today warned the broader picture fuelled concern for the future of the labour market.

The number of jobless fell by 36,000 in the quarter to March to 2.455 million, a rate of 7.7%, down by 0.1% on the previous quarter, the Office for National Statistics (ONS) said.

But the number of people on jobseeker's allowance (JSA) unexpectedly shot up in April as the number of women claimants hit a 14-and-a-half year high.

Economists warned unemployment is likely to go up over the coming months, despite the improvement in today's figures, as Government austerity measures bite.

Howard Archer, chief UK and European economist at IHS Global Insight, has forecast unemployment to increase to 2.67 million by the end of this year.

"We suspect that likely below-trend growth will mean that the private sector will be unable to fully compensate for the increasing job losses in the public sector that will result from the fiscal squeeze that is now really kicking in," he said.

The so-called claimant count increased by 12,400 last month to 1.47 million, the largest increase in 16 months, the ONS said. Economists were expecting a decline of between 4,000 and 10,000.

The number of women claiming JSA increased by 9,300 to 474,400, the highest level since October 1996, while the number of male claimants increased by 3,100 to 994,200.

The surge in the female claimant count came as more single mothers switched from income support to JSA, due to changes to benefit rules introduced in 2008, the ONS said.

Dave Prentis, Unison general secretary, said it was "tragic" that women were bearing the brunt of a "bankers' recession".

He said: "As public sector job losses gather pace, the number of women out of work will keep on rising. This is a huge backwards step for equality, and a direct hit on families who are already struggling to cope."

The number of unemployed men fell by 31,000 on the quarter to reach 1.43 million, while the number of unemployed women fell by 5,000 to reach 1.03 million.

The number of jobless 16 to 24-year-olds decreased by 30,000 over the quarter to 935,000.

Employment has increased, showing a 118,000 rise on the quarter to 29.24 million, but the figure is still 332,000 lower than the pre-recession peak reached in May 2008.

Employment Minister Chris Grayling said he was encouraged by today's figures.

He said: "These are welcome figures showing another rise in full-time employment in the private sector.

"It's good news to see that unemployment is also going in the right direction and pleasing that unemployment has fallen for young people.

"We're determined to tackle youth unemployment, which is why we've taken steps to ensure that young people get the best possible support to get back to work, including lining up thousands of employers to provide work experience places and introducing apprenticeship places."

Total average weekly earnings, including bonuses, increased by 2.3% in the year to March, the ONS said, a slight improvement on the year to February.

A toxic combination of muted wage growth and soaring inflation has clamped down on household spending power in recent months and the knock-on effect is hitting all sectors of the economy.

Shadow work and pensions secretary Liam Byrne warned the country was not out of the woods yet.

He said: "The claimant count is up, vacancies are down and this is before the wave of public sector redundancies and school leavers come on to the books.

"A host of respected business organisations are warning that choppy waters are ahead, and this is why we are saying the Tory-led Government needs to do far more to get Britain back to work."