Is the job market losing steam?

However, the claimant count - those claiming jobseekers allowance - rose by 900 last month to 836,700, the Office for National Statistics (ONS) said.

Average earnings growth rose by 3.7% in the year to September, compared with a downwardly-revised 3.8% rate in August.

Analysts said the data suggested UK interest rates would remain on hold.

Wage growth softens

Analysts said the fall in average wages over the period was due to the timing of bonus awards, and less overtime available - particularly in the construction sector.

The unemployment numbers ... indicate that the labour market has lost momentum Peter Dixon, Commerzbank

"The Bank of England will be particularly pleased to see that headline average earnings growth softened in September, while the underlying rate was stable," said Howard Archer, Global Insight economist.

"The Bank has repeatedly expressed surprise that wage growth has remained subdued, despite the tightness of the labour market."

Meanwhile, the ONS added that the rise in the claimant count - for the second month in a row - could mean that the downward trend in the jobless total is evening off.

Slowdown concerns

Recently the manufacturing sector has suffered from rising costs and slowing demand, and growth in gross domestic product for the three months to September was weaker than expected.

The news also follows a warning from the British Chamber of Commerce that the UK economy is set to slow in 2005 in the face of rising interest rates and oil prices.

"The unemployment numbers were within the range of expectations, it does indicate that the labour market has lost momentum, that is an indication that the global slowdown is washing up on the UK," said Peter Dixon of Commerzbank.

Most experts said they expected the Bank of England to retain its dovish stance on rates following the latest jobless figures.