Olympic jobs boost helps employment hit record high

The number of people in work hit an all-time high of 29.6 million in the three months to August, as the Olympics and Paralympics gave a huge fillip to the jobs market, official figures showed yesterday.

The economic boost from the Games created more than 100,000 jobs in London this summer, while unemployment unexpectedly fell by 50,000 to 2.53 million, the lowest for more than a year.

Mark Hoban, Employment minister, described the figures as a "real landmark", but many economists expressed fears that the Olympic jobs dividend consisted mainly of part-time or temporary roles, and predicted unemployment would start rising again over the winter.

Melanie Bowler, economist at Moody's Analytics, said: "A substantial increase in the number of part-time employees during the quarter was an important driver and likely reflects hiring for the Olympics. The improvement in the unemployment rate is therefore likely to prove temporary. Shrinking public-sector payrolls due to fiscal tightening and weakness in key sectors such as manufacturing, financial services, construction and retail will put upward pressure on the unemployment rate into 2013."

Despite unemployment falling to 7.9 per cent during the quarter to August, Moody's says it could rise to 8.6 per cent by the middle of next year, potentially adding more than 200,000 to dole queues. The figures also showed a 13,000 rise in those out of work for a year or more to 897,000 – close to 16-year highs.

David Kern, chief economist at the British Chambers of Commerce, said: "Despite the positive figures there are areas of concern, particularly the further increases in the number of people unemployed for more than a year, and for more than two years."