Jobless claims post biggest rise since 1992

By Sumeet Desai and Matt Falloon

LONDON (Reuters) - The number of people out of work and claiming benefits rose for a fifth month running in June and by its largest amount since the slump of the early 1990s, in a sign the economic slowdown is starting to bite.

Analysts say unemployment looks set to rise further as companies shed workers to try to cope with the downturn -- a further blow for the ailing Labour government which lags far behind in the opinion polls.

The Office for National Statistics said on Wednesday claimant count unemployment rose by 15,500 last month after an upwardly revised 14,300 increase in May.

That was the biggest jump since a 71,000 rise in December 1992 and above analysts' forecasts for an increase of 10,000.

Sterling fell after the larger than expected rise in claims encouraged investors to bet that interest rates may fall to shore up the economy even as inflation rises.

"The labour market is being hit increasingly by the marked economic downturn," said Howard Archer, an economist at Global Insight.

At 2.6 percent in June, however, the proportion of working age people claiming benefits is a far cry from the near 10 percent rates seen in the early 1990s when the economy was in recession.

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