UNEMPLOYMENT rose in September by less than had been predicted, with the number of Britons claiming jobless benefit increasing at the slowest rate for 16 months, official data showed yesterday, raising hopes that the recent swathe of job losses may be ending.<br /><br />The Office for National Statistics (ONS) said that the claimant count – which includes those receiving Job Seeker’s Allowance – rose by just 20,800 last month compared to forecasts for an increase of 25,000. But the measure still stands at a 12-year high of five per cent.<br /><br />The wider International Labour Organisation (ILO) measure rose by 88,000 to 2.47m in the three months to August, much less than the increase of 281,000 seen in the previous quarter, putting the rate of unemployment at 7.9 per cent.<br /><br />Encouragingly, youth unemployment did not reach the 1m mark that some had feared, but the number of jobless 18-24 year-olds is still at a worryingly high 946,000, said IHS Global Insight’s Howard Archer. <br /><br />As a lagging indicator, unemployment is still expected to continue to rise well into 2010 but the latest set of data has caused some economists to revise down their peak forecast. <br /><br />Investec’s Philip Shaw said: “We have recently nudged our forecast of the peak down to 2.7m (8.8 per cent of the workforce) which we expect to be hit around the middle of next year.” However, others cautioned that any relapses in the economy over the coming months could push unemployment back towards the 3m level. <br /><br />Jobs have been shed at a slower rate than in previous recessions, despite the relative severity of the downturn this time around. This may indicate a more flexible labour market but it could also reflect that British firms are hoarding labour, Investec’s Shaw said, adding that employment could be slower to pick up during the upswing.