Unemployment dropped slightly to 4.8% in the first quarter of the year as the jobs market showed “early signs of recovery”, official figures show.

The jobless rate for the January-March period was down from 4.9% a month earlier, according to the Office for National Statistics.

Separate figures from HM Revenue and Customs showed 97,000 people were added to UK payrolls in April – the fifth increase in a row.

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However the total number of people in jobs as measured this way was still 772,000 lower than before the pandemic.

Job vacancies in the three months to April hit their highest level since the start of 2020.

The ONS said: “The latest figures suggest that the jobs market has been broadly stable in recent months, with some early signs of recovery.”

Darren Morgan, ONS director of economic statistics, said: “The number of employees on payroll rose strongly in April as the economy began to reopen, continuing the improvement from its November trough.”

Mr Morgan said that the reopening had boosted vacancies particularly in sectors such as hospitality and entertainment.

However, the headline unemployment figures were partly skewed by a sharp rise, during the latest lockdown, in the number of people who are now no longer looking for work and therefore not classed as “unemployed”.

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Meanwhile, pay growth is also accelerating, hitting 4.6% in the three months to March when stripping out bonuses.

That is the highest level since 2007 – though this is also partly due to pandemic effects, with a fall in the number of lower-paid jobs.

Britain’s economy shrank by nearly 10% last year, its biggest annual decline in three centuries – and contracted further in the first quarter of 2021 as latest lockdowns held back business activity.

But the government’s furlough scheme, subsidising the wages of workers temporarily laid off due to the pandemic, has held back the rise in joblessness.

Earlier this month, the Bank of England – which had feared unemployment would rise to just under 8% this year – said it now expected it would peak at just under 5.5%.

The Bank is forecasting GDP growth of 7.25% for 2021 as the economy reopens, which would be the strongest since 1941.

Responding to the latest figures, chancellor Rishi Sunak said: “Protecting and creating jobs continues to be my top priority.

“While sadly not every job can be saved, nearly two million fewer people are now expected to be out of work than initially expected.”

Employment minister Mims Davies said: “A continued fall in unemployment, a further rise in vacancies, and growth in the employment rate is welcome news as we continue on our roadmap to recovery.”

Thomas Pugh, UK economist at Capital Economics said: “The slight fall in the unemployment rate… suggests that the government’s job furlough scheme is still insulating the labour market from the worst effects of the pandemic.”

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