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The public sector has lost almost a quarter of a million jobs in a year and unemployment has risen above 2.5 million as spending cuts bite, fuelling concern about slow economic growth.

The Office for National Statistics said public sector employment shrank by 110,000 to 6.04 million in the second quarter, twice the rate of previous quarters and the largest fall since comparable records began in 1999. Over the year the total fell by 240,000.

Unemployment rose by 80,000 to 2.51 million in the three months to July compared with the three months to April, the largest increase for almost two years. The number of jobless women reached 1.06m, the highest since 1988.

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The jobless rate was 7.9 per cent of the workforce, unchanged from last month's data but up from 7.6 per cent in the previous quarter.

The figures were broadly in line with economists' expectations but underlined concern about economic uncertainties as clouds gather in the euro zone and the U.S.

Howard Archer of IHS Global Insight said it was a "worrying jobs report, which indicates that the economy's persistent weakness, lower business confidence and public sector job cuts were now feeding through to take a significant toll on jobs".

The number claiming jobseekers' allowance rose by 20,300 to 1.58 million in August, a slightly smaller increase than the market expected, after a revised rise of 33,700 in July.

Local government bore the brunt of the public sector job cuts, losing 57,000 jobs in the quarter while central government employment fell by 47,000. The NHS was down by 26,000 and education by 16,000. Of the overall fall, 14,000 was attributed to the ending of temporary census posts.

Employment across the economy fell by 69,000 to 29.14 million in the three months to July, with a drop of 122,000 in part-time employment attributed to the public sector cuts.

Redundancies rose by 47,000 to 162,000, with women bearing the brunt of the increase. The number of unemployed 16 to 24-year-olds rose by 78,000 to 973,000 or 20.8 per cent of the economically active population in that age group.

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Average earnings excluding bonuses rose 2.1 per cent on a year earlier, down 0.2 points on the previous quarter and less than half the rate of inflation, with only finance and business services showing strong growth. Including bonuses, the rise was 2.8 per cent, up 0.1 points.

North-east England had the highest unemployment rate, up 1.3 points on the quarter to 10.7 per cent. The lowest rate was in the south-east, up 0.1 points at 5.8 per cent.

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