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British jobs market 'on the turn'

Experts have warned that the UK jobs market is "on the turn" after official figures showed a lower-than-expected drop in unemployment.

The paltry decline in the number of jobless - down 8,000 in the three months to July to 2.47 million - overshadowed a record surge in employment.

A surprise increase in the closely-watched Jobseeker's Allowance claimant count also reinforced fears of a relapse in the jobs recovery.

Data from the Office for National Statistics (ONS) revealed 2,300 more people joined the dole queue last month, taking the total to 1.47 million - the first increase since January.

Economists said the figures cast doubts over whether the private sector was strong enough to compensate for the 600,000 jobs expected to go over the next five years under the Government's imminent spending review.

Andrew Goodwin, senior economic adviser to the Ernst & Young ITEM Club, said: "The August rise in the claimant count, while small, was the first increase for seven months and provides further evidence that the labour market is on the turn.

"This is particularly concerning given that this comes before the public spending cuts have really got under way."

While the ONS figures show the largest rise in employment since records began in the three months to July, much of this rise was accounted for by students taking on part-time work rather than those on benefits finding jobs.

The ONS said the number of employed workers soared by 286,000 to 29.2 million, although this had little impact on the level of unemployment. The rate of unemployment stayed static at 7.8%.

Those in part-time work increased by 166,000 quarter-on-quarter to 7.9 million in the three months to July suggesting many are still struggling to secure full-time work.

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