The number of people without work and claiming benefit fell by 1,400 last month, seasonally adjusted. The jobless total stands at a five-month low of 2,939,600, having fallen by 52,700 since January.
Gillian Shephard, the Secretary of State for Employment, rebutted Labour accusations that her department was fiddling the figures by encouraging people to claim invalidity and sickness benefits, rather than unemployment benefit.
Officials at the Employment Department and the Treasury are increasingly convinced that the jobless total is genuinely falling. But they have yet to trumpet the turning point publicly, fearful that the recovery could still stall.
Unemployment fell last month in the South, the Midlands, Wales and Northern Ireland, but rose in London, East Anglia, the North, Scotland, Yorkshire and Humberside. About 10.5 per cent of the workforce is unemployed in the UK as a whole.
Frank Dobson, Labour's employment spokesman, said: 'When the figures fell in February I said I feared it might be a freak or a fiddle. I still don't know whether the fall was a freak, but I am sure it's a fiddle.'
Mr Dobson - and many City economists - believe unemployment has fallen since January as Employment Department officials have urged claimants to switch benefits. Officials may have made an effort to cut jobless totals before the end of the financial year to meet performance targets. But Mike Fogden, chief executive of the Employment Service, said: 'There is absolutely no truth in the accusation that computer failures or pressure to move people on to sickness benefit are responsible for the fall in unemployment.'
The Department of Social Security said there was no upsurge in invalidity or sickness benefit claims between January and March.
City economists remain sceptical. 'It is very likely we will get a rise in May,' said Ian Shepherdson, of Midland Global Markets.
But evidence that the labour market may be turning round came in revisions to manufacturing employment figures which showed that more jobs had been shed late last year than first thought, but that a net 11,000 new factory jobs were created between January and March, the first quarterly rise for three years.
The number of people unemployed for a year or more rose by 45,000 in the three months to April to 1,075,000, the highest for more than five years. Vacancies notified to JobCentres fell by 1,600 in April to 124,600, after two rises.
View from City Road, page 28Reuse content