The minutes of the Monetary Policy Committee meeting earlier this month, also released yesterday, indicated that it was a question of when, not if, it should cut rates again. The majority view was that "although the direction of interest rates was still more likely than not to be down, there was no urgency this month".
The evidence from the jobs market was mixed, despite the small rise in unemployment. On the one hand the claimant count rose by 4,300 to 1,311,000 in February, and the survey measure of joblessness rose by 37,000 in November to January.
On the other hand, employment climbed by 119,000 in those three months to reach 27,319,000, a new record. The number of people of working age who were "inactive", or out of the workforce, fell by 100,000.
Most of the new jobs created in the latest quarter were part-time and in the service industries. More than 80 per cent of those taking part- time work did not want full-time jobs.
Manufacturing employment fell substantially, however; it dropped by 109,000 to just over four million in the three months to January.
Nor were there any signs of wage pressure. The recently relaunched average earnings index grew by 4.3 per cent in the year to December, compared to 4.5 per cent the previous month.
Andrew Smith, the employment minister, said the figures showed an improvement in the jobs market. Higher levels of economic activity were accompanied by a "welcome moderation" in earnings growth.
But John Monks, TUC general secretary, said there was a very difficult time ahead, especially for manufacturing.
"With wage growth moderating and no sign of inflationary pressures in the economy, the Bank of England must cut interest rates when it meets next month," he said.
The minutes showed that eight of the nine MPC members had voted to leave rates at 5.5 per cent. The ninth, Willem Buiter, voted for a cut of 0.4 percentage points - a degree of precision that bemused analysts.
"The minutes make it clear that the decision to make no change in March was about timing and tactics rather than strategy," said Michael Saunders, an economist at Salomon Smith Barney.
The financial markets have pencilled in another two quarter-point reductions in interest rates this year. Most forecasts predict that unemployment will rise further as growth stalls in the first half of 1999.
"If the economy turns by mid-year, we might see 250,000 more jobs lost," said Neil Parker at Royal Bank of Scotland. "It is no comfort for those quarter of a million, but there would be that many new jobs gained over the following year."Reuse content