Reuters - British unemployment hit its highest rate since January 1997 in the three months to May, although the number of people claiming jobless benefit rose by much less than expected last month, data showed on Wednesday.

The Office for National Statistics said claimant count unemployment rose by 23,800 in June, much less than analysts’ forecasts for a rise of 40,500. Nonetheless, the claimant count rate rose to 4.8 percent, its highest since November 1997.

The wider ILO measure of unemployment rose by 281,000 in the three months to May, the biggest quarterly increase since records began in 1971, taking the jobless rate up to 7.6 percent.

That was the highest since January 1997 and exceeded forecasts for a rise to 7.4 percent.

The data will reinforce policymakers’ caution about the timing and strength of any economic recovery, despite signs that the slump in activity may be over.

“I think the growing divergence between the claimant count and labour survey numbers is important and I can’t take much encouragement in the smaller rise in jobless claims when the economy is shedding so many jobs,” said Ross Walker at RBS.

Sterling pared gains against the dollar and dipped further against the euro after the figures were released.

The ONS said the number of people in work fell by 269,000 in the three months to May, the steepest decline since records began in 1971.

“I don’t think we’re going to see any significant improvement in this data any time soon,” Walker said.

Average earnings including bonuses rose at their fastest pace since December, up 2.3 percent in the three months to May compared with a year ago. Excluding bonuses, however, average pay rose 2.6 percent in the three months, the lowest since records began in 2001.