Ministers have greeted the latest employment statistics with delight – as they show a rise in employment, a drop in unemployment and a fall in the number of people claiming benefits.

Jim Murphy, minister for employment and welfare reform, said: “The latest figures provide a picture of a strong labour market – employment up, unemployment down and the numbers on benefits falling.

“This is welcome news. The UK already has the highest employment rate of the G8, but we are determined to reach our long-term aim of an 80 per cent employment rate and to break for good the cycle of poverty and benefit dependency.”

The latest figures show a 14,000 rise in the number of employed people over the quarter and a 274,000 rise over the year. The ILO measurement of unemployment also fell by 29,000 – but is up by 139,000 over the year.

But the number of people who are classed as economically inactive – of working age but not looking for a job – has risen by 74,000 over the quarter. The underlying trend appears to be down – over the year the number of economically inactive people fell by 89,000.

And although the number of people claiming Jobseeker’s Allowance fell by 5,500 in December – to 943,100 – it is up by 35,200 over the year.

The number of vacancies remains high, with an estimate of 600,900 unfilled vacancies in the three months to December.

TUC general secretary Brendan Barber commented: “It is still hard to find clear trends in the labour market. Although an extra 14,000 people are now in work, this month’s figures show that 74,000 have now joined the ranks of the economically inactive.

“The number of people who are currently out of work but who would like a job is now higher than it was a year ago. The TUC is concerned that another rise in interest rates could see jobs being lost, leaving even more people wanting work but unable to find it.”