ACS

Unemployment fell to a 30-year low last month, data from the Office of National Statistics has shown. The total number of people in employment rose to an all-time high of 29.51 million, up 450,000 on a year ago - the biggest rise for a decade. At the same time, growth in average earnings fell back to its lowest since last July.

"These are superb figures and show the real underlying strength of the labour market. They also contradict the gloom that the Conservatives have been trying to spread in the past few days," said the employment minister, Stephen Timms. "We are now in the credit crunch and the challenges are here, but the evidence is that we are weathering things well," he added, pointing to the low level of redundancies and record high vacancy figures.

Economists acknowledged that the headline labour market statistics were good, which is not surprising after several years of very strong economic growth and record profits for British firms at the end of last year. However, labour market data is traditionally a lagging indicator because, in a slowdown, firms tend to keep labour for a while before making layoffs in the hope that the downturn will be temporary.

Economists noticed some signs in the data that suggest a turning point may be in the offing. "The beginnings of the UK labour market softening were evident in the report," said Rob Carnell, an economist at ING Financial Markets.