Jobless figures were today forecast to rise for the third month in a row as cutbacks in manufacturing continue.

The monthly increase in the number of people claiming unemployment-related benefit is thought to have accelerated during December to around 7,500.

That will take the overall figure to around 966,000 and lift the jobless rate by 0.1% to 3.3%, economists said today.

The figures, due to be released on Wednesday, reflect several months of cost-cutting as UK companies face up to the economic slowdown.

On the same day that unemployment data was being announced last month, computer giant ICL said it was cutting 1,500 positions.

Thousands of jobs have also been lost in the aviation industry as airlines tackle the impact of the September 11 terrorist attacks.

Despite the upward trend in unemployment, shoppers still provided the UK's retail sector with its busiest Christmas in years.

HSBC economist John Butler believed unemployment growth might be the answer to the Bank of England's concern about excessive consumer spending.

He said: "All indicators are pointing to just a gradual weakening in the labour market. It is through this mechanism that we expect consumer spending to eventually slow."

The week's other key announcement is again expected to show the benign impact of inflation on the UK economy.

The underlying rate stood at 1.8% in November - one of the lowest levels since records began in 1976.

Firms are planning to recruit over the next few months, but most will only be replacing staff who leave, according to a new survey today.

The outlook for job prospects in the first quarter of the year were described as "cautious" by recruitment firm Reed, which surveyed 800 companies across Britain.

Half said they would be recruiting to retain staff numbers, while a third planned to expand.

One in ten firms said they would be cutting jobs, although the figure was higher in the north west (15%), Scotland (14%), the south west and the South (both 13%).