Record-breaking figures credited to Olympic effect

The number of people in work hit a record high of 29.6 million in the three months to August, as the Olympics and Paralympics gave a huge fillip to the jobs market, official figures showed yesterday.

The economic boost from the Games, right, created more than 100,000 jobs in London this summer, while unemployment unexpectedly fell by 50,000 to 2.53 million, the lowest for more than a year.

Employment minister Mark Hoban described the figures as a "real landmark", but many economists expressed fears the Olympic jobs dividend consisted mainly of part-time or temporary roles and predicted unemployment would start rising again over the winter as the economy emerges hesitantly from a double-dip recession.

Moody's Analytics economist Melanie Bowler said: "A substantial increase in the number of part-time employees during the quarter was an important driver and likely reflects hiring for the Olympics. The improvement in the unemployment rate is therefore likely to prove temporary. Shrinking public-sector payrolls due to fiscal tightening and weakness in key sectors such as manufacturing, financial services, construction and retail will put upward pressure on the unemployment rate into 2013."

Despite unemployment falling to 7.9 per cent during the quarter to August, Moody's says it could rise to 8.6 per cent by the middle of next year, potentially adding more than 200,000 to dole queues. The figures also showed a rise of 13,000 in those out of work for a year or more to 897,000 – close to a 16-year high.

David Kern, chief economist at the British Chambers of Commerce, said: "There are still some areas of concern, particularly the further increases in the number of people that have been unemployed for more than a year, and for more than two years. The overall economic situation remains difficult." The employment figures will come as a relief to the Government, which is under pressure to ease its austerity drive.

At the latest Bank of England meeting nine members of the Monetary Policy Committee voted unanimously to maintain the QE purchases.