Unemployment fell for the second consecutive quarter in the first three months of the year but the number of people claiming jobseekers' allowance has risen.
Unemployment fell by 36,000 to 2.46 million in the first quarter, with the unemployment rate now standing at 7.7%.
Despite the fall, the number of people claiming JSA rose by 12,400 to 1.47 million. Of this, 9,300 were women, the highest figure since October 1996.
For those aged 16-24, unemployment stands at 935,000 with one in five out of work.
But with government spending cuts coming into force, predictions for the future remain gloomy.
Per Larsen, spokesperson at huddlebuy.co.uk, says: "The worry is that the latest figures could be the calm before the storm. Although the focus seems to be on youth unemployment, the real worry is the public sector time bomb."
Howard Archer, chief economist at IHS Global Insight, explains that the private sector will be unable to fully compensate for increasing job losses in the public sector that will result from the fiscal squeeze.
"We forecast unemployment to rise to 2.67 million by the end of 2011 and to peak around 2.75 million around mid-2012," he says.
Meanwhile, average earnings, including bonuses, increased by 2.3%.