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The jobless total at the end of December was 2.46 million, down by 7,000 on three months ago, according to the Office of National Statistics (ONS). It means that the unemployment rate stands at 7.8 per cent, a slight improvement on the previous figure of 7.9 per cent.

The number of 16-to-24-year-olds out of work also fell, down from 943,000 in September to 927,000 in November. The number of people claiming jobseeker's allowance reduced to 1.61 million.

Secretary of state for work and pensions, Yvette Cooper, said: "The jobs market is still tough for a lot of people, but the drop in unemployment and youth unemployment is very welcome. It means 450,000 fewer people are out of work than everyone expected last spring. The extra investment in jobs, education and training is making a real difference, helping people through the recession and preventing the kind of unemployment we saw in the 1980s and '90s.

"However we know that things will still be difficult and unemployment is still likely to rise over the next few months. That is why we are determined to keep increasing the help and support to get people into jobs and training."

John Philpott, chief economic adviser at the CIPD, said: "The latest unemployment figures are good news on the face of things, but only on the face of things. Taken in the round, the latest figures show that the UK jobs market remains in a far from healthy state and it would be wrong to conclude that unemployment has peaked.

"The reason for the fall in unemployment in the quarter is a jump of 81,000 in the number of economically inactive students - indicating that ever larger numbers of young people are turning to study to avoid the dole. This is desirable as an alternative to unemployment although it remains to be seen whether education or training is merely a stop-gap choice for thousands more young people rather than providing a genuine boost to their subsequent job prospects."

Brendan Barber, TUC general secretary, said: "Today's unexpected fall in unemployment is very encouraging and shows government action is working. But with nearly a million young people still out of work, there's a long way to go before we can talk about a healthy jobs market.

"Long-term unemployment is still a huge concern, and it will continue to rise well after the recession ends."

Despite the good news on unemployment, there was more sobering economic news yesterday when it was revealed that inflation had risen sharply.

ONS said that the consumer price index (CPI) measure of inflation had risen to 2.9 per cent, up from an annual rate of 1.9 per cent in November. Meanwhile the retail price index (RPI), which includes housing costs, rose to 2.4 per cent, its highest level since November 2008. It was the biggest monthly rise in the annual rate since records began.

(Source: Peple Management)