UK unemployment total rises again

UK unemployment rose by 44,000 to almost 2.5 million in the three months to the end of December, the Office for National Statistics (ONS) has said.

Youth unemployment rose to a fresh record high, with more than one in five 16 to 24-year-olds out of work after a rise of 66,000 to 965,000.

The unemployment rate is now 7.9%, with youth unemployment running at 20.5%.

The number of people claiming Jobseeker's Allowance also increased, by 2,400 last month to 1.46 million.

Prime Minister David Cameron said unemployment, particularly among the young, was "a matter of great regret".

But he stressed that it had been a problem for some time.

The number of people in part-time work because they could not find a full-time job rose by 44,000 to 1.19 million, another high since records began in 1992.

"The latest UK labour market figures provide further evidence that the jobs recovery has gone into reverse," said economist Vicky Redwood.

Long-term unemployment also deteriorated, with 17,000 more people out of work for more than a year, to a total of 833,000.

Other data from the ONS showed that average earnings rose by 1.8% in the year to December last year, slightly down on the 2.1% growth in the year to November.

The figures also showed that unemployment fell in Scotland by 13,000, but rose in England, Wales and Northern Ireland.

'Less impressive'

The government said the latest figures showed that unemployment was starting to stabilise.

"We've got a long way to go and I want to see these figures start to come down, but certainly the evidence is over the past month things have settled down and we are not seeing the increases we saw earlier in the last quarter," said Employment Minister Chris Grayling.

There were 40,000 more job vacancies in the three months to January than in the previous three months. This is often seen as an indicator of the health of the economy and whether companies are creating jobs.

But the ONS said that most of these new vacancies were temporary jobs, working on the 2011 Census. Excluding this, there were 8,000 more vacancies.

Shadow work and pensions secretary Liam Byrne said this was a sign that the government could not rely on the private sector to create jobs.

"There are still five people chasing every single job and in about a hundred constituencies, 10 people are chasing every job," he told BBC News.

'Disappointing'

Most analysts still expect unemployment to rise in the coming months, largely because of public sector spending cuts implemented by the government, which are designed to bring down the UK's budget deficit.

"The labour market data are disappointingly softer overall and fuel our suspicion that unemployment is likely to trend up gradually in 2011 in the face of below-trend growth and increasing job losses in the public sector," said Howard Archer at IHS Global Insight.

Economists suggest the economy would have to grow at an annual rate of about 2% for unemployment to fall.

In the final three months of last year, the economy shrank by 0.5%, and although many analysts expect a return to growth in the current quarter, few expect GDP to top 2% this year.

Speaking at a press conference to launch the latest Inflation Report, the governor of the Bank of England said it had lowered its growth forecasts following the weak growth data at the end of the year.

Mervyn King also said the Bank expected inflation to remain high over the next year.

Latest figures released on Tuesday showed that the Consumer Prices Index measure of inflation had hit 4%. This was expected to increase pressure on the Monetary Policy Committee to start raising interest rates.

The markets are expecting a series of rate rises this year. The question for many is how far rates will have to rise.

However, there is still the concern about the possible effect any increases would have on the economic recovery.

For that reason, economist James Knightley from ING said the unemployment figures supported their view that interest rates may not rise as much as the market anticipates.