THE number of Britons claiming jobless benefit fell last month by the biggest amount since April 2007, but the dip masked an increase in the number of people who have given up the search for work, official data showed yesterday.

The Office for National Statistics said the number of people claiming jobless benefit fell by 15,200 in December, well above forecasts for a fall of 2,500 and coming on top of an upwardly revised decline of 10,800 in November.

The jobless rate for the three months to November fell to 7.8 percent from 7.9 percent in October after the first fall in 18 months in the number of people looking for work.

At the same time the number of people actually in a job dropped by 14,000 to 28.921 million in the three months to November.

The shortfall was made up by an increase in the proportion of the labor force neither in work nor looking for a job, which rose to 21.2 percent in the three months to November, the highest since August 2007. This took the absolute number to 8.046 million people, the highest since records began in 1971.

The figures highlight the uncertain outlook for the British economy, with signs that unemployment is turning the corner but fueling concerns about the pace of recovery given that many people seem to be withdrawing from the labor market.

Bank of England Governor Mervyn King said in a keynote speech late on Tuesday that macroeconomic uncertainty meant that central bankers were waiting for conditions to become clearer before making definitive choices on monetary policy.

Gilt futures pared gains after the data and BoE minutes were released at the same time, as investors initially took the figures as broadly positive on economic growth.

But economists had some reservations.

"The jobless figures show a rather steeper than expected decline in the claimant count but it does seem that many people are moving out of the labor market, which is what you would expect to see at this stage," said Stephen Lewis, economist at Monument Securities.

"It looks as though the labor market has stabilized, but whether it remains that way depends on the way demand develops."

Average weekly earnings excluding bonuses also rose by an annual 0.7 percent in the three months to November, the statistics office said.