A RECORD number of people are in work - but the gloom overshadowing the manufacturing industry remains, according to figures.

Union leaders urged the Government to intervene in a bid to halt the haemorrhaging of jobs in manufacturing firms, while employers pointed out that employment growth over the past year had been solely fuelled by the public sector.

The Government hailed the "steady improvement" in the labour market and pointed out that the UK now had one of the highest employment rates in the world.

The employment level reached 27.9m in the three months to June, the highest since records began in 1984, after an increase of 63,000 in the number of people in work over the quarter.

Unemployment fell by 42,000 over the same period to 1,458,000, a rate of five per cent - the lowest for two years - according to figures from the Office for National Statistics (ONS).

Unemployment in the North-East was down 4,000 to 68,000, while Yorkshire and Humber region was down 1,000 to 123,000.

But jobs continued to be lost in manufacturing, where the number of employees plunged to an all-time low of 3.51m.

A total of 129,000 jobs were lost in the three months to June, compared with the same period a year ago, mainly in electrical and optical equipment, textiles, leather and clothing.

Brendan Barber, TUC General Secretary, said: "The historic performance of the labour market under the current Government is being overshadowed by the failure to regenerate the manufacturing sector.

"Industry is losing thousands of skilled workers due to global competition. This will continue until the Government takes bolder steps towards building a business environment in which the UK competes on quality and innovation, rather than purely on cost."