British unemployment fell by 32,000 in the three months to the end of January, according to figure from the Office for National Statistics.

The total number of people out of work now stands at 1.61m, while the amount claiming jobseeker's allowance feel by 2,800 in February.

The figures suggest the impact of the credit crunch that has wreaked havoc on the world's financial markets has yet to filter through to recruitment.

The ONS also revealed that average pay earnings rose by 3.7% in January, down slightly on the figure for December.

Pay inflation could be a key factor in whether the Bank of England decides to cut interest rates again in the near future.