Employment levels are rising and unemployment is falling, but growth in earnings continues to be modest.

The latest figures from the Office for National Statistics show that employment numbers are up 93,000 over the quarter, with 29 million in employment. Unemployment has fallen by 35,000 over the same period but has increased over the year by 2,000. The claimant count has fallen for 11 out of the last 12 months.

Commenting on the findings Dr John Philpott, chief economist at the Chartered Institute of Personnel and Development (CIPD), said: "The labour market is performing well. As CIPD surveys predicted, the 'drought' in jobs for employees which began in the middle of 2006 has come to an end but workers have been unable to secure pay rises to match last year’s surge in inflation.

"The pay dog didn’t bark let alone bite – confounding a host of vocal Jeremiahs. Indeed, the CIPD is increasingly concerned that cash strapped workers might rein back on spending to such an extent that the recovery in private sector jobs will go into reverse later this year at a time when public sector employment is starting to fall."

Philpott also pointed to the decline in the number of part-time jobs.

"It is too early to conclude whether this dip in part-time female employment will be temporary or persist," he remarked. "But it casts a cloud over today’s launch of the government’s latest consultation on welfare reform with its emphasis on helping lone parent mothers into work – most of whom will be looking for part-time employment."

The annual rate of growth in average earnings excluding bonuses was 3.5 per cent in May 2007, down 0.1 percentage point from the previous month. Including bonuses, it was also 3.5 per cent, down 0.6 from the previous month.