New figures showing a huge fall in unemployment and a record number of people in work were derailed yesterday when a leading train firm announced 1,300 job cuts.

Canadian engineering giant Bombardier said three factories in the UK would close and jobs would be cut at several others under plans to restructure the business.

The bad news was tempered by a decision to keep open the company's biggest factory in Derby, which later this year will become the only site in the UK where trains are built.

The announcement marred official statistics showing that unemployment fell by 33,000 in the three months to January to 1,436,000, the second lowest figure since records began in 1984.

The number of people claiming unemployment benefit fell by 6,600 last month to 885,200, the lowest total for almost 30 years, while a record 28.27 million people were in work, 262,000 more than a year ago, mainly driven by the rise in women workers.

Work Minister Des Browne welcomed the figures, adding: "The UK has one of the best labour markets in the world, with the highest employment and lowest unemployment of the major world economies.

"The continued strength of the UK economy under this Government means the number of people in work has hit a new record high. We are close to achieving our ambition of three quarters of working age people in jobs."

Chancellor Gordon Brown said in his Budget statement that 1.8 million jobs had been created since Labour came to power in 1997.

But today's data also showed that the number of economically inactive people stood at 7.85 million in December, up by 74,000 over the final quarter of the year.

Of this total, 5.73 million people did not want a job and 2.12 million had either given up looking or were not available to start work.

Jobs continue to be axed in manufacturing and there was a bigger-than-expected rise in earnings growth across the UK because of an increase in bonuses in City and other financial firms.

Paul Holmes, the Liberal Democrat's Department for Work spokesman, said the figures showed that in the last year 88,000 jobs had been lost in the manufacturing industry, with 17,000 going in the last quarter.

He said: "Gordon Brown's spin and gloss cannot hide the fact that the Government is turning a blind eye to the collapse of the manufacturing industry.

"The Government's indifference to the thousands of jobs going to the wall is shocking."

Thursday March 18, 2004