Unemployment highest since 1997

Unemployment now stands at 1.825 million, its highest level since 1997, according to the Office of National Statistics (ONS).

The 0.4 per cent increase on the April to June period puts the unemployment rate at 5.8 per cent, while the feared increase to two million by Christmas draws closer.

The number of unemployed people rose by 140,000 over the three months.

A total of 156,000 people reported they had become redundant.

Chris Grayling, shadow work and pensions secretary, said: “The trend in the unemployment figures is now becoming really damaging and will be a huge worry up and down the country.

Paul Dales at Capital Economics said: “We think that employment will contract by around 1.5 million in total over the next two years.

“With the workforce likely to rise slightly, this will leave unemployment rising by around 1.7m. This would take the unemployment rate to 10.5% by the end of 2010, broadly matching the early 1990s peak.”

The number of vacancies fell by 40,000 to 589,000 between July and September, suggesting Britain’s tightening economy is not providing the support needed in the jobs market.

Public sector employment rose by 13,000 to 5.77 million over the three months, while private sector employment was down 29,000 to 23.77 million.

The claimant count rose by 36,500 – slightly less than expected – to just short of one million.

Some 29.4 million people were recorded in employment and 7.9 million were found to be “economically inactive”.

Wage growth stood at 3.3 per cent – down 0.1 per cent on the previous quarter.

Salaries increased most in the public sector (up 3.9 per cent), while they were lowest in manufacturing (up 2.5 per cent).

Average weekly hours worked in the three months to September 2008 were 32.0, up 0.1 from the three months to June 2008.