UNEMPLOYMENT in Britain continued the inexorable rise of the past year during March, with another sharp monthly increase driving the jobless rate to its highest for 2½ years.

In figures that reinforced doubts over the sustained recovery in consumer spending expected by the Bank of England, numbers out of work and on benefits rose by a further 12,600 last month.

The twelfth increase in the claimant count of unemployment in the past thirteen months came on the heels of a revised 19,900 rise in February which was the steepest since the end of the last UK recession in December 1992.

March’s increase pushed the claimant unemployment rate up to 3 per cent, its highest since October 2003.

The gloomy picture was compounded by a rise in the Government’s preferred, survey-based measure of joblessness. This rose by 30,000 for the three months to the end of February, to 1.56 million. On this basis, the unemployment rate rose to 5.1 per cent, from 5.0 per cent previously.

There was some brighter news, with numbers in work also rising, by 76,000 over the same three month period from December to February.

Yet City economists said that the continued, sustained increase in numbers out of work must cast doubt over consumers’ continued willingness to keep spending.

“A 32,000 rise in unemployment over the last two months is a worrying sign that last year’s weak demand is feeding through, with the usual lags, to the labour market,” Geoffrey Dicks, of RBS Financial Markets, said. He suggested that once the temporary boost to earnings from the present bout of big City bonuses had passed “we will be left with moderate earnings griowth and rising unemployment — not the recipe for a rebound in consumer spending”.

Figures breaking down job losses and changes in employment levels are intermittent. However, the official data as well as ancedotal reports point to job losses being concentrated in the retail, restaurants and leisure sectors that are most affected by consumer demand, as well as in manufacturing.

• A BUMPER round of bonuses in the City triggered a much sharper rise in wage growth in February as bankers, brokers and traders reaped the benefits of booming markets and merger activity (Gary Duncan and Tom Bawden write).

  Headline average earnings growth in the three months to February leapt to 4.2 per cent from 3.6 per cent in January’s data. On a year-on-year basis, pay growth was even stronger, jumping to a February rate of 5.3 per cent, from 3.1 per cent in the previous month.

  The strong rises in pay came after a year of record profits in the financial industry. The Office for National Statistics said that its information showed bigger bonuses this year than last. Average earnings growth remained subdued after stripping out the effect of bonuses, at 3.8 per cent in February, unchanged from January.

  Almost 3,000 people in the City have received bonuses of more than £1 million each in recent weeks, according to Brewin Dolphin, the broker.

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