LONDON, Sept 16 (Reuters) - The number of Britons claiming jobless benefit rose by 24,400 in August, broadly as expected, and the rate of unemployment on the wider ILO measure rose to its highest since 1996, official data showed on Wednesday.
The Office for National Statistics said the number of people claiming jobseekers allowance rose to 1.607 million in August, the highest since May 1997. However, last month's rise was below a 25,200 increase in July and less than a quarter of the increases seen at the start of this year.
The number of Britons out of work on the ILO measure rose by 210,000 in the three months to July, taking the jobless rate up to 7.9 percent -- the highest since Sept-Nov 1996. However, that was no worse than expected and the pound ticked up after the figures.
"It does look as though the rate of joblessness will not reach as high a peak as we thought it might have done at the start of the year even though it will remain at high levels for some time to come," said Philip Shaw, economist at Investec.
Policymakers have warned that unemployment is likely to keep rising even as economic conditions stabilise. Moreover, the impact of the recession may have been muted by workers' willingness to accept lower wages or shorter working hours to preserve their jobs.
This trend has been coming through in the official data, with average earnings growth including bonuses easing to 1.7 percent in the three months to July from 2.5 percent in the three months to June. In July alone, pay growth fell to 1 percent from 1.9 percent in June.
Earnings growth excluding bonuses fell to 2.2 percent in the three-month period, the lowest since records began in 2001.
On Tuesday, Prime Minister Gordon told a Trades Union Congress conference that public spending will need to be cut to tackle Britain's soaring debt. Unions claimed cuts will prolong the recession and increase unemployment.
Bank of England Governor Mervyn King sounded a cautious note about the strength of any recovery in Britain, indicating that monetary policy would remain loose for some time to come.
"Most worrying is the speed with which pay growth is now slowing," said Vicky Redwood, economist at Capital Economics.
"As Mervyn King highlighted yesterday, even if the recession is technically over, it will continue to feel like one for many people for a long time yet." (Editing by Andy Bruce)