• Youth unemployment stays above 1 million • Public sector loses 67,000 jobs in three months • Private sector adds 5,000 over same period • But claimant count rise is less than feared

UK unemployment has hit a fresh 17-year high after the public sector shed thousands more jobs and the private sector failed to pick up the slack.

Youth unemployment held at a record high of over 1 million and the total number of unemployed people rose to 2.64m over the three months to October, according to official figures.

The Office for National Statistics said that at 8.3% the unemployment rate was at its highest since 1996.

But economists said there were tentative signs the deterioration in the labour market was slowing, if not reversing. The more recent data on the number of people out of work and signing on for benefits rose less than feared last month. The claimant count went up by 3,000, well below the 14,900 forecast by economists.

"Clearly the labour data are deteriorating, but much more slowly than the recent pace and not as badly as previously feared," said Alan Clarke, economist at Scotia Capital.

"So while that is consistent with a picture of the economy growing below trend, it may well be telling us that things aren't actually that terrible and could be a clue that the economy hasn't yet slipped into recession."

The ONS also released data on public sector job cuts. As the government's austerity drive continued, the number of people employed in the public sector fell by 67,000 between June and September, with the majority of those job cuts in local government.

The coalition has been hoping to rebalance the labour market towards the private sector, but that added only 5,000 jobs over the same period. It was the second consecutive quarter that growth in employment in the private sector did not offset the drop in the public sector.

Still, there were more encouraging figures for the government for the year as a whole. Private sector employment was up 262,000 on a year earlier, while public sector employment was down by 276,000.