Jobless rise sparks fears for recovery

FEARS that Britain's economic recovery is in danger of stalling were fuelled yesterday by official figures showing the first rise in unemployment for six months and the biggest fall in factory output for five years, writes Robert Chote.

But most City economists accepted the Treasury's view that unemployment is still on a downward trend and growth in factory output has slowed rather than gone into reverse.

Unemployment, seasonally adjusted, rose by 200 in July to 2,912,200, having fallen every month since February. But the Department of Employment said there may have been an unusually large number of former students signing on for benefit.

A net 16,000 new factory jobs were created in June, giving an increase of 21,000 this year, but the number of people unemployed for a year or more rose by 6,000 between April and July, reaching a five-year high of 1,081,000.

Factory output fell 2.1 per cent in June, following a 1.5 per cent jump in May. But the figures have been distorted by a late bank holiday, which saw some factories shut for an extra day in June.

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