Decline in jobless figures may `level off'

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The Government yesterday admitted that the rate of fall in unemployment might be starting to "level off". The warning came as new figures showed the number of people claiming unemployment benefit fell for the 23rd month running in January, but the decline of 12,300 to 1,398,500 was far less than expected. The jobless rate stayed unchanged at 5 per cent of the workforce, the lowest for 18 years.

As the Prime Minister launched the advertising campaign for the Government's ``New Deal'', the number of jobless claimants actually rose in the North- east, Scotland and Northern Ireland.

"There are signs that the rate of fall might be starting to level off," said Andrew Smith, Employment Minister, even as he welcomed the news of a further decline in the headline jobless figure.

The Office for National Statistics said the lower-than-expected drop last month could have been caused by claims not being processed over Christmas. It said the labour market continued to be "healthy", with the trend fall in unemployment in the range 20,000-40,000 a month.

Even so, yesterday's batch of figures contained other indications that the recovery in the jobs market is slowing. Most significant, underlying average earnings growth remained unchanged at 4.75 per cent.

The ONS pointed out that earnings were rising at an annual rate of 9.6 per cent in financial services, driven by a surge in City bonuses.

Incomes Data Services, which monitors pay deals, recently reported a surge in the number of settlements above 4 per cent. The Engineering Employers' Federation also recently expressed concern about higher settlements.