Latest unemployment figures hailed

The jobless total was cut by 45,000 in the three months to June to 1.65 million, the lowest for over a year, while the number of people claiming jobseeker's allowance fell for the 10th month in a row. The so-called claimant count was 855,300 in July, down by 8,500 from the previous month, the lowest total for more than two years.

Meanwhile, the number of people in work increased by 93,000 over the quarter to June to 29.07 million, the second highest figure on record.

The total number of hours worked in the three months to June was 934 million, an increase of almost eight million from the previous quarter and the highest figure since records began in 1971.

Employment minister Caroline Flint said it was a "very strong" set of figures, adding: "The total number on the main out-of-work benefits - jobseeker's allowance, incapacity benefits and lone parent benefits - has fallen by over one million since 1997. Employment is at near record levels and unemployment is down again, but we are determined to do more."

The figures were marred by an increase in the numbers classed as economically inactive, including those looking after a relative, taking early retirement or people who have given up seeking work. The figure rose by 7,000 to reach 7.95 million, more than 20% of the working population, the second highest figure on record.

The number of manufacturing jobs also continued to fall, down by 46,000 in the latest quarter compared with a year ago, to 2.96 million, the lowest figure since comparable records began almost 30 years ago.

British Chambers of Commerce policy adviser Kieran O'Keeffe said the figures brought little good news for the "growing number" 16 to 17-year-olds not in education, employment or training. "While overall unemployment may have fallen, the prospects for too many young people continue to decline," he said.

"The rate of unemployed school leavers has now risen to 27%, a stark indication of how our education system is letting young people down."

Shadow chief secretary to the treasury Philip Hammond said: "For all Gordon Brown's boasts of economic success, there is still a huge amount of talent and potential in Britain going to waste. When you read the small print, the true figure for 'hidden unemployment' in the UK is about four million and there are 176,000 more young people not in work, education or training than in 1997."