The Government has said new unemployment figures painted a "positive picture" after the number of people claiming jobseeker's allowance fell to its lowest for more than four years and employment reached a record high.
But doubts over the UK's economic recovery remained after long-term and youth unemployment increased. Unions warned that a "toxic combination of part-time, minimum wage, zero-hours working" was spreading across the country, while business groups said unemployment remained "stubbornly high".
The so-called claimant count fell by 29,200 in July - the ninth consecutive monthly drop - to 1.4 million, the lowest since February 2009, while total unemployment, including those not eligible for benefit, fell by 4,000 in the quarter to June to 2.5 million.
Unemployment among 16 to 24-year-olds increased by 15,000 to reach 973,000, while the number of people out of work for more than two years rose by 10,000 to 474,000, the highest since 1997.
Other figures from the Office for National Statistics (ONS) showed that average weekly earnings, including bonuses, increased by 2.1% in the year to June, up by 0.3% on the previous month. It is the first time the rate has gone over 2% since 2011, but the ONS said it reflected unusually high bonus payments in April.
The number of people in work increased by 69,000 in the quarter to June to 29.78 million, the highest since records began in 1971 and 301,000 more than a year ago. The jobless rate remained at 7.8%, against the 7% figure given by new Bank of England governor Mark Carney as a possible trigger for changes in interest rates.
The ONS said the number of people aged 16 to 64 in employment has almost recovered to what it was at the start of the recession five years ago, but the employment rate has not recovered as much because of a 673,000 increase in the population of this age group. The employment rate for men is unchanged at 76% but has increased by 0.1% to 66.7% among women.
Employment minister Mark Hoban said: "With 29,000 fewer people claiming jobseeker's allowance compared to this time last month, and more people in work than ever before, today's figures paint a positive picture of the UK labour market. There are now more jobs available than at any time since the end of 2008, and more hours being worked than ever before - which shows that there are opportunities out there for people who want to work and get on in life."
Dave Prentis, general secretary of the Unison union, said: "Today's small drop in unemployment rates masks the damaging growth of under-employment plaguing the country and stifling economic recovery. A toxic combination of part-time, minimum wage, zero-hours working is spreading across the country, as decently paid, full-time opportunities become increasingly rare."
Shadow employment minister Stephen Timms said: "Any increase in employment is to be welcomed, but the real story of the labour market is a living standards crisis with falling real wages, and millions working harder for less. David Cameron says he's fixed the economy but for ordinary families things are getting harder not easier. Ministers just sound out of touch when they ignore the fact that the number of people who are working part-time because they cannot find a full-time job is at record levels."