The number of people out of work has continued to fall, hitting a 27-year low according to official figures.

Jobless figures from the Office for National Statistics (ONS) fell by 36,000 in the three months to December, bringing the total number of people out of work to 1,506,000.

The number claiming benefits or 'on the dole' also fell, down 3,500 to 928,500.

The ONS suggested average earnings had risen by 3.7% in the year to December although the manufacturing industry continued to suffer.

Ongoing woes

The figures suggest 3.1% of the workforce are claiming unemployment benefit, emphasising greater-than-expected resilience to growing economic gloom.

Employment is rising but wage pressure is almost non existent Philip Shaw, Investec

However, the healthy picture was not mirrored in the manufacturing industry.

Employment in the struggling sector fell nearly 150,000 in the three months to December, to the lowest level since records began in 1985.

"I think the job market is still very mixed...and we expect the trend to continue," said Alan Castle, an economist at Lehman Brothers.

Employment strength

There was good news from employment figures, which showed 27.8million people were in work in the final three months of 2002, up 150,000 on the previous three months.

EMPLOYMENT GROWTH

2002: 253,000 2001: 217,000 2000: 200,000

"The UK labour market is showing a very benign tendency," said Philip Shaw, chief economist at Investec, adding that the uncertain economy meant wage increases were still soft.

Average earnings rose 3.7% between October and December, down from 3.8% in the three months to November.

"Employment is rising but wage pressure is almost non existent.

"This gives the MPC (Monetary Policy Committee) further scope to deal with economic weakness, with the danger of any inflation pressure from the labour market being very small indeed."