Unemployment falls to 25-year low

The chancellor, Gordon Brown, today received a pre-Budget fillip when unemployment fell again in March to 939,600 - its lowest level in more than 25 years.

The office for national statistics (ONS) said that the claimant count measure of unemployment fell 6,000 to just 939,600 last month, the lowest since October 1975 and giving a jobless rate of 3.1%. The claimant count is now 45,000 lower than a year ago and has fallen for three consecutive months.

The government-preferred International Labour Organisation (ILO) unemployment total, which counts people not eligible for benefit, fell by 14,000 in December-February compared with the previous quarter to 1,520,000. The ILO-defined unemployment rate was 5.1%, unchanged from the previous quarter.

In further positive news for the chancellor, inflation remained dormant despite the strong jobless figures. Earnings growth slowed to the lowest level on record.

Growth in average earnings, a key measure of wage inflation pressures, fell to 1.9% in the three months to February from 2.9% in January, the lowest since records began a decade ago. Lower financial sector bonuses brought down average earnings.

But manufacturing remained a black mark. In the year to December, 142,000 industrial jobs were lost.

These figures are good news for the economy but we remain very concerned that manufacturing jobs continue to haemorrhage, Bill Morris, general secretary of the Transport and General Workers Union, said. We look to the chancellor to use the Budget to offer the government's commitment that manufacturing matters.

ONS figures on government borrowing showed that the Treasury was in better financial shape than it had forecast, giving Mr Brown some latitude on spending. The ONS reported that public sector net borrowing for the year to March was 1.3bn, compared to a forecast 2.5bn deficit.

The job market data coincided with the release of minutes from the Bank of England's latest meeting on interest rates earlier this month. The minutes disclosed that the Bank's nine-member monetary policy committee (MPC) voted unanimously to keep rates at a 38-year low of 4% and were in little hurry to raise them.

All agreed that the case for increasing interest rates in order to restrain consumption growth was not yet pressing, the MPC said.

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