Unemployment rose just 30,000 to 2.46m in the three months to September, the lowest rise for 16 months, in a sign that employment levels may be stabilising.

Economists said the data were “really encouraging” and confirmed that the UK labour market was performing better than in past recessions in spite of a deep drop in output.

Problem areas persisted, however. Male and long-term unemployment continued to rise and youth unemployment reached a record rate. Even if the labour market reaches a turning point earlier than expected, recovery could be slow and fragile.

The unemployment rate was unchanged at 7.8 per cent of the workforce, better than analysts predicted. It underlined hopes that joblessness could peak significantly under 3m, or nearly 10 per cent – and well below the postwar high of 11.9 per cent, recorded in 1984.

The number of people in employment actually rose 6,000 to 28.93m, the first increase since July 2008. But the jobs being created were part-time and being taken by women, rather than being spread between the sexes.

The number of people claiming jobseeker’s allowance rose 12,900 to 1.64m in October, slower than September’s 20,600 rise.

The number of those aged between 16 and 24 out of work rose 15,000 to 943,000 compared with the previous three months, a record rate of 19.8 per cent.

However, more than a quarter of that total were actually in full-time education. They count as jobless even if they look for as little as one hour’s work a week. The UK youth unemployment rate, even including the students, is below the European Union average.

Some relief in West Midlands

There was some relief in the official labour figures for the hard-hit West Midlands, where unemployment fell 14,000 to 270,000 in the three months to September .

Small quarterly falls were also seen in Yorkshire and the Humber and north-east England.

However, the West Midlands unemployment rate remained the highest in the UK at 10 per cent of the workforce –
3.4 points higher than a year ago.

The largest quarterly rise was in Wales, which saw an increase of 14,000 to 125,000, 8.7 per cent of the workforce. For two months in the summer Wales bucked the trend as the only part of the UK where unemployment fell, but this has now reversed.

Year on year, the highest increases after the West Midlands were in Northern Ireland, up three points at 7.2 per cent; Scotland, up 2.5 points at 7.2 per cent; and south-west England, up 2.3 points at 6.6 per cent. North-east and south-east England had the lowest year-on-year rises.

Ian Mulheirn, director of the Social Market Foundation, said the emphasis on youth unemployment was “misguided and excessive” and led to policy responses that favoured the young to the exclusion of older people. “If anything they are taking less pain than older unemployed people right now,” he said.

“The rate at which people in the 16-24 age group find work has bounced back strongly in recent months and is almost 50 per cent higher than that for people aged 25-plus.”

John Atkinson, of the Institute for Employment Studies, said just as the fall in employment had been less severe than expected, “so too the improvement in hiring seems likely to be slow and low”.

While unemployment rose just over 1 per cent over the past quarter, those jobless for six to 12 months rose nearly 12 per cent and those out of work for more than a year rose 13 per cent to 618,000, the highest figure for 12 years. The number of people classed as economically inactive, including those on long-term sick leave or who have given up looking for work, rose 41,000 to nearly 8m.

Vacancies fell 1,000 to 428,000, the smallest monthly fall since April 2008. Redundancies fell 62,000 to 205,000.

Average earnings, excluding bonuses, increased 1.8 per cent in the three months to September compared with the previous year. The figure including bonuses rose 1.2 per cent.

Yvette Cooper, work and pensions secretary, announced the next 35,000 jobs to be created for the young and long-term unemployed through the Future Jobs Fund, bringing the total to 95,000.