Unemployment in the UK economy has continued to increase, according to the latest figures from the Office for National Statistics.

Some 20,100 more people claimed government assistance for unemployment in July, taking the total to 864,700. The increase was the largest monthly rise since December 1992 and followed a similar rise in June.

There were also a total of 60,000 more unemployed people over the quarter to June. This took the overall level of unemployment up 0.2 per cent to 5.4 per cent.

The number of unemployed men was 980,000 in the three months to June 2008, up 47,000 from the last quarter, while the number of unemployed women was 692,000 in the three months to June 2008.

The number of people unemployed for over 12 months was 411,000 in the three months to June 2008.

Meanwhile, the number of job vacancies stood at 634,900 – down 47,400 from the previous quarter. As a result the working age employment rate was 74.8 per cent, down 0.1 percentage point from the previous quarter.

Commenting on the figures Howard Archer, of analysts Global Insight, said: “It seems inevitable that extended very weak economic activity and deteriorating business confidence will exact an increasing toll on the labour market over the coming months.

The ONS figures also show headline annual earnings growth was limited to 3.3 per cent in June, and to 3.4 per cent in the three months to June. The underlying rate was also contained at 3.5 per cent and 3.7 per cent respectively.

The figures are below the 4.4 consumer price index (CPI) inflation level reported by the ONS yesterday, suggesting real earnings are now in decline.