The number of people claiming unemployment benefit fell by 5,700 in January to 1,305,300. Unemployment also fell by 15,000 in the three months to December on the broader survey measure to reach 1,790,000.
The Confederation of British Industry said unemployment was unlikely to continue falling and urged the Bank of England to cut interest rates again.
Minutes of the last meeting of the Bank's Monetary Policy Committee, which were published yesterday, showed that eight members voted for the unexpected half-point cut in rates this month. One - Willem Buiter - favoured a bigger reduction.
The minutes emphasised the danger posed by global slowdown, and showed that the MPC had significantly revised its forecast of wage inflation.
The committee made pointed reference to the inaction of the European Central Bank, which is also causing concern at the Treasury. The minutes said: "The prospects for the global economy would be better if there were a more positive outlook for demand growth in the euro area."
Analysts said the minutes showed a bias in favour of further interest- rate cuts. "With structural improvements in the jobs market and no inflationary pressure, we think rates could fall to 3.5 per cent next year," said Leo Doyle, an economist at Dresdner Kleinwort Benson.
Yesterday's data showed a rise of 122,000 in employment in October-December, taking the total to a new peak of 27,286,000. The unemployment rate remained at 4.6 per cent, near the US's 4.3 per cent.
"It is great news that unemployment is still falling. We are getting a taste of the US," said Steven Bell, chief UK economist at Deutsche Morgan Grenfell.
Unemployment measured by the Labour Force Survey showed increases in the North-east, Scotland, Wales, the West Midlands and North-west in the latest quarter. The biggest jobless falls were in London and Northern Ireland. London and the South-east had the biggest jobs gains.
The regional pattern was explained by the continuing loss of manufacturing jobs, down by 85,000 in the year to the fourth quarter of 1998. New jobs were added in services.There were 88,000 more part-time jobs and 35,000 full-time.
The number of unemployed in the main New Deal category - 18 to 24-year- olds out of work for more than six months - fell from 119,915 in April 1998, when the programme was launched nationally, to 76,990 in January.
The fall in unemployment has levelled off. Many economists now expect the total to rise, but they believe the jobs market is now working more efficiently.
Unemployment is lower than the level at which it would have triggered wage inflation in the past. The official average earnings figures are still suspended. But the new statistics due soon are expected to indicate that wage inflation is declining.
This will be reinforced by the fact that City bonuses, paid early in the year, are said to be one-fifth lower than last year. Figures from the Engineering Employers' Federation showed settlements in January, a key month, fell below 2.5 per cent to their lowest since March 1995.Reuse content