The UK unemployment rate increased 0.2% in the three months to November 2010, to take the rate up to 7.9%, according to the Office for National Statistics.
The total number of unemployed people increased by 49,000 over the quarter to reach 2.5 million.
Brian Johnson, insolvency practitioner at HW Fisher & Company chartered accountants, said: "The latest figures show that the recent trend of increasing unemployment is continuing. The future prospects for unemployment in 2011 remain bleak, particularly as the effects of any government cutbacks are still not being felt within the job market."
Rates could rise further
He thinks the unemployment rate is set to rise further through 2011 as the public sector cuts announced in October last year hit home.
"As consumers retrench retail and construction could be in for a particularly tough year and we expect company failures and job losses to be high in these two sectors," he added.
In a more positive light, claimant count unemployment fell by 4,100 in December following a 3,200 drop in November to stand at a 21-month low of 1.45 million.
But Howard Archer, chief European and UK economist for IHS Global Insight, said that although labour market data is mixed in the near term he expects a modest deteriorating trend to emerge as 2011 progresses.
He forecasts unemployment on the International Labour Organisation measure to rise to 2.65 million by the end of the year and thinks it will peak at around 2.75 million in mid-2012. This would see the unemployment rate rise to 8.4% by the end of 2011 and hit 8.6% at its peak in 2012.
"Major job losses will occur in the public sector as the government slashes spending and there are also likely to be significant job losses in private companies supplying services or goods to the public sector.
"In particular, many firms are likely to try and meet any increase in business through making greater use of the workers they have already, or through using part-time staff," Archer added.
Part-time workers now account for 27.3% of total employment, up from 26.7% at the end of 2009 and 25.7% at the end of 2008. This suggests businesses are reluctant to take on full-time workers due to concerns over the longer-term economic outlook.
This article was written for Interactive Investor