The Office for National Statistics (ONS) said the number of payrolled workers rose by 68,000 (0.2%) between January and February.

Overall there were 693,000 fewer workers on payrolls than in February 2020, with more than half – 368,000 jobs – lost in the hospitality sector as lockdowns and restrictions hammered the industry.

The ONS added that 123,000 payroll jobs were also lost in the hard-hit retail sector.

The latest figures show the rate of unemployment stood at 5% between November and January, compared with 5.1% in the previous three months.

Sam Beckett, ONS head of economic statistics, said: “After yet another monthly increase, there were almost 200,000 more employees on payroll in February than three months earlier, although that is still nearly 700,000 down from the start of the pandemic.

“Of the decrease since then, almost two-thirds has been among the under-25s, over half has been in hospitality and almost a third has been in London.”

Tej Parikh, Chief Economist at the Institute of Directors, said: “The labour market is showing some signs of resilience in the face of covid-19.

“The pandemic has led to an unprecedented rise in job losses, but with continued support from the furlough scheme and the economy now gradually reopening, worst case scenarios are now slowly coming off the table. Unemployment will continue to edge up over the year, as cashflow remains challenging, but it is likely to peak lower than expected when the pandemic first took hold.

“Many firms are still tapping into the Job Retention Scheme to keep staff onboard, as they navigate restrictions in the first quarter. This has kept unemployment from rising even higher. The extension of furlough out to September will also provide vital support for firms as they attempt to rescale in line with the reopening roadmap. Vacancies are likely to start growing again meanwhile, as businesses look to bounce back as restrictions wind down.

“The furlough scheme is helping business to bridge the pandemic. The Government should remain prepared to extend support if the recovery goes off kilter, and boosting the UK’s retraining and reskilling capabilities will only become more important as the labour market attempts to adjust to the post-pandemic economy.”

Jack Kennedy, UK economist at the global job site Indeed, commented: “With the unemployment rate easing back and the number of payrolled employees rising for three months in a row, there are some green shoots in this data.

“A year on from the day a shellshocked Prime Minister declared the first national lockdown, Britain’s labour market is still reeling. Nearly 700,000 fewer people are in work than were at this time last year, and the toll among under 25s has been nothing short of brutal – they account for 60% of those losing their jobs.

“Looking ahead, the outlook is mixed. With the furlough scheme still holding back the floodgates of further job losses, the market is braced for a wave of further redundancies when Government support is eventually withdrawn.

“For those looking for a new job now, competition in many sectors is intense. The ONS data shows that between December and February there were 601,000 vacancies across the UK, and that new jobs were being created at an ever slower pace.

“But the very latest data is more upbeat. In March, the number of jobs posted on Indeed rose – and the tally now sits at 29% below the pre-pandemic level, up from 36% at the start of 2021.”

“Progress is halting but real. With the reopening of the leisure and hospitality sectors due to inject a surge of hiring over the summer months, for all the jobs market’s current weakness, the glass is at last starting to look half full.”