Claimant count rises much less than expected

LONDON (Reuters) - The number of Britons claiming jobless benefit in October rose by its smallest amount in 18 months, while the number of people in work rose for the first time in over a year, official data showed on Wednesday.

The Office for National Statistics said on Wednesday claimant count unemployment rose by 12,900 last month, well below forecasts for an increase of 20,000.

The number of people without a job on the wider ILO measure rose by 30,000 in the three months to September to 2.461 million, the smallest rise since March-May 2008.

That left the jobless rate steady at 7.8 percent, from the previous three-month period, confounding expectations for a rise to 8.0 percent.

The number of people in work actually rose by 6,000 in the three months to September, the first increase since May-July 2008.

The pound rose almost half a cent against the dollar as the figures raised hopes that the worst of the recession has passed and that unemployment will peak at a lower level than previously feared.

"On the face of it, it would suggest that there is a process of a stabilisation in the labour market which is in train, which in turn implies some sort of recovery in the economy," Philip Shaw, chief economist at Investec, said.

The figures come just before the Bank of England publishes new growth and inflation forecasts. The central bank has slowed the pace of its asset purchase scheme, but is expected to signal that it will keep interest rates at a record low of 0.5 percent until well into 2010.

One reason for the resilience of the labour market could be that workers have been willing to accept lower wages and other changes in their conditions to protect their jobs.