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Benefit claims lowest in five years

The number of people claiming unemployment benefit fell last month to its lowest level for five years, yet underlying growth in earnings was unchanged in April. The only evidence to cast a shadow over benign jobs market figures yesterday was a decline in employment in the first few months of the year, especially in manufacturing.

Michael Meacher, Labour's shadow employment minister, attacked the Government's record on unemployment.

"Job insecurity is rife and the outlook for manufacturing industry is bleak. Job creation in Tory Britain is a part-time phenomenon. It is now highly unlikely unemployment will continue to fall at its present rate for very much longer."

Labour called for planned government spending of pounds 240m on small and medium businesses, due to be announced alongside today's competitiveness White Paper, to be spent directly on job creation.

However, employment minister Eric Forth welcomed last month's fall of 14,800 in the claimant count: "Few people are between jobs for very long."

The number claiming benefit fell to 2,167,600 or 7.7 per cent of the workforce. Joblessness has fallen by an average of 13,000 a month for the past six months. The decline last month was spread across all regions except East Anglia, where there was no change.

Yet the underlying growth of earnings remained unchanged at 3.75 per cent in April, even though actual earnings growth rose to 4 per cent and was also revised up to 4 per cent in March. Underlying pay growth fell to 4 per cent in manufacturing in April. But it was revised up to 3.5 per cent in services in February and March, and remained there in April.

City economists drew comfort from the fact that the overall figure was unchanged. Jonathan Loynes from HSBC Markets said: "Recent evidence of falling pay settlements bodes well for earnings." Some, however, thought a further pick-up in pay in service industries could take the headline figure higher in coming months.