Unemployment is down and earnings have crept up, according to the latest figures.

Research from the Office for National Statistics (ONS) found that over the three months to February 2008, the unemployment rate was 5.2 per cent, down 0.1 percentage point from the previous quarter.

The number of unemployed people fell by 39,000 over the quarter.

The number of vacancies was 687,600, up 12,000 from the previous quarter. The increase in average earnings – including bonuses – was 3.7 per cent, down 0.2 percentage points from the previous month.

Excluding bonuses, pay inflation was 3.8 per cent, up 0.1 percentage point from the previous month.

A rise in the number of older workers represents almost half of the annual increase in employment with 7.89 million people over 50 now continuing to work.

But the labour market is starting to show some signs of softening as slowing growth and weaker business confidence impact, according to analysts.

“Unemployment is a lagging indicator and it seems highly likely that slowing growth and weaker business confidence will exact an increasing toll on the labour market over the coming months,” commented Howard Archer of Global Insight.

“Significantly, latest labour hiring surveys are clearly softer,” Mr Archer said.

Earnings inflation increased this month, and although it is still below the 4.5 per cent considered consistent with the Bank of England’s two per cent inflation target, the central bank will be keeping an eye on further wage rises, Mr Archer concluded.