Unemployment rate falls for second month running

Strong growth in private sector jobs helped push unemployment down in the three months to March this year by 36,000 compared with the previous quarter, the Office for National Statistics reported yesterday. The headline figure stands at 2.45 million.

The unemployment rate slipped from 7.8 per cent to 7.7 per cent, although the more timely claimant count edged higher, suggesting the recent slowdown in the economy may yet show through in the overall jobless figures. But changes to benefits eligibility have also distorted that measure, which showed a rise of 12,400 to 1.47 million.

Analysts took the data as broadly encouraging, and they represent a fillip for ministers who had been anxiously awaiting signs of private-sector job growth to compensate for the 310,000 public-sector posts to be axed by 2015.

The ONS said 118,000 new jobs were generated in the first quarter. For the first time since the recession began, there was a small decline in the number working part time or temporary, with full-time permanent positions showing a relatively healthy upward trend: the number of full-time workers was up by 146,000.

Employment levels are now not far short of where they were before the recession – 29.24 million now against a peak of 29.57 million in April 2008. The increase in the jobless rate since then is because of growth in the labour force and those seeking employment, especially among older age groups.

Malcolm Barr, an economist with JP Morgan, said: "The strength of employment around year end sends a very positive message about the ability of the private sector to take up the slack. The bad news is that the most timely data warn this may not last."

Contrary to recent trends, there was also a modest fall in the level of youth employment, although at 1 million and about 20 per cent of 16 to 24-year-olds, it remains high and worrying for many. The claimant rate for younger people rose. Employers appear more prepared to keep older workers on past retirement – particularly women – than to take on teenagers.

A spokesperson for the Princes Trust said: "We are deeply concerned that the number of young people claiming benefits is on the rise once again. There is an ambition crisis among our poorest young people.

"If we fail to help the UK's most disadvantaged young people into work, we risk creating a 'youth underclass'."

The employment minister, Chris Grayling, responded: "We're determined to tackle youth unemployment, which is why we've taken steps, including lining up thousands of employers to provide work experience places and introducing apprenticeship places.

"From next month our new Work Programme will be available for people of all ages who need extra tailored support to get into jobs."

CBI calls for faster action

The Government's determination to tackle the deficit deserved support but it was "taking too long" to provide the private sector with the conditions it needed to deliver a sustainable economic recovery, the leader of the country's biggest business organisation said last night.

Helen Alexander, the president of the CBI, said her members were concerned that ministers were failing to live up to promises on policies such as energy, infrastructure and tax.

Addressing the same audience, Nick Clegg, the Deputy Prime Minister, said the Government had begun work on rebalancing the economy. "The economy is out of the danger zone, but we need to hold our nerve," he said.