Jobless rate highest since Jan 1997

By Fiona Shaikh and David Milliken

LONDON (Reuters) - Britain's jobless rate hit a 12-year high in May after a record rise in unemployment over the previous three months, and the figures showed little prospect of any let-up as the economy struggles out of recession.

Economists drew scant comfort from the smallest rise in the number of people claiming unemployment benefit for a year, and instead questioned how useful the measure was given employment levels had dived.

The Office for National Statistics said ILO unemployment rose by 281,000 in the three months to May -- the biggest quarterly increase since records began in 1971 -- taking the jobless rate to 7.6 percent, the highest since January 1997.

"Truly horrible," said Howard Archer, economist at IHS Global Insight. "It is hard at the moment to be anything else than pessimistic about the labour market."

Analysts reckon this broad survey-based measure of joblessness, which also includes those seeking work but not claiming joblessness benefits, will hit 3 million next year -- bad timing for Prime Minister Gordon Brown's Labour government, which must call an election by next May.

Policymakers have also warned unemployment is set to keep rising even as conditions in the wider economy start to stabilise or improve, and Wednesday's data highlighted the uncertainty surrounding the timing of any recovery.

The number of people claiming jobless benefit rose by 23,800 in June, its smallest increase in a year, but even so the jobless rate on this measure still hit an 11-1/2 year high of 4.8 percent.

"These are clearly mixed results. It shows that the global recession is continuing to lead to rises in unemployment," employment minister Jim Knight told Sky News television.