The rise of 75,700 in the number of people on the dole was the biggest monthly increase since 1991, according to the Office for National Statistics. The last time the claimant count hit 1m was January 2001.
The sharp increase in unemployment was announced as National Express, the bus and train operator, said it would cut 750 jobs to cope with the worsening economic climate.
Total unemployment, including people not receiving benefit, rose by 137,000 to 1.86m during the three months to the end of October, according to the ONS. This was the highest total since 1997, the year Labour came to power. The unemployment rate increased by 0.4 per cent to 6 per cent. The data coincided with a Bank of England agents’ survey suggesting that businesses are planning to cut back sharply on investment as the recession cuts into demand and access to trade credit tightens.
Economists expect the total number of people out of work to approach 3m by the end of next year, equalling the peaks of the two previous recessions of the early 1980s and 1990s.
The number of redundancies has also risen sharply as the effects of the economic downturn have spread beyond the financial and construction sectors. The number of redundancies, during the three months to the end of October, increased by 41,000 to 180,000. The last time the level was this high was in 2002.
The number of redundancies is expected to continue to remain high with official figures lagging behind the recent spate of job cuts announced by hard-pressed businesses like National Express.
The figures revealed a disturbing rise in the number of jobless young people, aged 18-24, up by 55,000 in the three months to October to 597,000. This was the highest number since 1995.
Longer-term unemployment among the young has also risen. The number of 18-24 year olds out of work for 6 to 12 months has increased by more than a third over the past year.
The outlook for jobs is expected to deteriorate further next year with the number of job vacancies falling by 49,000 to 562,000 during the three months to the end of November equalling the lowest figure reported since records began in 2001. The last time it was this low was summer 2003.
The biggest falls in vacancies were in construction, down by 39.3 per cent over the past year. Vacancies were down 32.5 per cent in manufacturing; 29.4 per cent in transport and communications, and 26.1 per cent in financial services.