UK unemployment falls by 17,000 to 2.48m

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Media captionEmployment Minister Chris Grayling: "The fall is a small step in the right direction"

UK unemployment fell by 17,000 in the three months to the end of February to 2.48 million, the first drop since last autumn, official figures show.

The Office for National Statistics (ONS) said the rate of unemployment in the UK had fallen to 7.8%.

Unemployment among 16 to 24-year-olds stood at 963,000, with the jobless rate for young people remaining above 20%.

The number of people claiming jobseeker's allowance rose by 700 in March to 1.45 million, the ONS said.

It added that the number people in employment rose by 143,000 to 29.23 million, compared with a pre-recession peak of 29.56 million recorded for the three months to the end of May 2008.

Regional differences

While the number of unemployed men fell by 31,000 in the three months to the end of February, the number of jobless women rose by 14,000.

Although the number of unemployed 16 to 24-year-olds rose by 12,000 over the quarter to 963,000, there had been fears the number could breach the one million mark.

The rate of unemployment among 50 to 64-year-olds was unchanged at 4.8%, while the rate for those over 65 fell to 1.9% from 2.5%.

Within the overall unemployment figures there were wide regional variations, with the North East seeing 11,000 more people out of work, while the East of England saw 15,000 more unemployed.

Spending power

Employment Minister Chris Grayling said: "These figures are another step in the right direct direction.

"It's good news to see a rise in the number of full-time jobs in the private sector and the fall in unemployment is welcome.

"However, there are challenges ahead and our priority is to continue to support the economy, by reducing the deficit and putting in place measures to encourage growth in the private sector."

Shadow Work and Pensions Secretary Liam Byrne criticised the government for not doing enough to get people back to work, thereby adding, he told the BBC, an additional burden of £12.5bn in unemployment benefits over the next few years.

The ONS figures showed that average earnings rose by 2% in the year to February, while earnings excluding bonuses grew by 2.2%.

Both measures were well below the rate of inflation, as measured by the CPI index, which stands at 4%. Analysts said this provided further evidence of the squeeze consumers were feeling in their spending power.

Spending cuts

Despite the fall in the number of unemployed, analysts warned that the jobless number was likely to rise again.

"We retain the view that unemployment is headed up over the coming months," said Howard Archer at IHS Global Insight.

"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."

John Philpott, chief economic adviser to the the Chartered Institute of Personnel and Development, told the BBC: "Once the tax rises and spending cuts take their full effect on the labour market, unemployment will start to rise again"

The government is starting to introduce spending cuts designed to bring down the budget deficit.

It says that the cuts are necessary to restore international investors' confidence in the UK economy, while critics argue that the cuts could jeopardise the UK's fragile recovery.

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