INSTANT VIEW - Jobless rate highest since 1997

LONDON (Reuters) - Unemployment hit its highest rate since January 1997 in the three months to May, although the number of people signing on to claim jobless benefit rose by much less than expected last month, official data showed on Wednesday.

********************************************************

ANALYST REACTION

GEORGE BUCKLEY, CHIEF UK ECONOMIST, DEUTSCHE BANK

"The claimant count measure of unemployment did not rise as sharply as we thought it would in June, and the May rise was revised lower.

"Unemployment on this measure has been rising for 16 months, up by a total of 772k. Compare this to the same point in the 1980s and 1990s jobless cycle, when unemployment was up by 950k and 870k respectively. This may be because this time round employees are accepting lower wages and hours in return for keeping their jobs. This is evident in today's report -- annual earnings growth rose but this was only due to base effects."

VICKY REDWOOD, ECONOMIST, CAPITAL ECONOMICS

"The latest UK labour market contains conflicting signals about whether conditions in the labour market are getting better or worse.

"The claimant count measure of unemployment in June posted its smallest rise in a year. However, the wider ILO measure posted its biggest rise on record in the 3 months to May, of a whopping 281k. Either way, we doubt that unemployment will start falling again until GDP growth has got back towards its trend rate, and that is unlikely to happen for a long time yet."