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Last Updated: Wednesday, 15 February 2006, 11:24 GMT
UK unemployment total rises again
Jobseeker at jobpoint
The unemployment rate rose to 5.1%
The number of people out of work in the UK has risen further, according to figures from the Office for National Statistics (ONS).

The number of unemployed people rose by 108,000 to 1.54 million between October and December, the ONS said.

That pushed the jobless rate up to 5.1% - the highest rate for three years - from 4.8% in the previous quarter.

But the narrower measure of the number jobless people claiming benefit fell by 2,000 in January to 904,200.

Job cuts

The manufacturing sector was hard hit by job cuts. Employment in the sector fell to a record low of 3.09 million in the three months to December, down 106,000 on the period last year.

We continue to look for 50 basis points of rate cuts from the Bank over the next six months
James Knightley, ING

Over all sectors, however, the ONS said that fewer jobs had been lost through redundancy, while the actual number of vacancies across the country had risen during the three-month period.

Employment Minister Margaret Hodge said the rise in unemployment should not cause too much concern saying the latest figures reflected a "mixed picture".

"I remain... quite optimistic that the underlying trends seem to me to be pretty robust," she said.

"We have got nearly 200,000 more people working in Britain today than we had a year ago."

Further ONS data also showed that annual average earnings growth in the three months to December rose to 3.6%, up from 3.4% in the previous quarter.

The faster-than-expected growth was driven by a pick-up in pay during December following higher bonus payments.

Rates debate

Experts added that while the data was unlikely to push the Bank of England into a near-term interest rate cut, it may harden the case for a cut in coming months.

"Overall, the labour market remains soft and in an environment of rising taxes and utility bills, consumption will remain subdued," said James Knightly, economist at ING.

"With inflation also firmly on a downward trend we continue to look for 50 basis points of rate cuts from the Bank over the next six months."

On Wednesday morning, the Bank of England unveiled its latest quarterly inflation report, which forecast that UK inflation was expected to stay close to the government's 2.0% target rate over the next two years.

Some analysts saw this as a sign that the Bank is likely to keep UK rates on hold at 4.5% for some time to come.

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