The employment rate remains at a near high but weekly wages actually fell in the three months to December, official statistics reveal.
In its monthly assessment of the labor market, the Office for National Statistics found that the number of people out of work rose by 46,000 in the three months to December from the previous quarter to 1.47 million.
The number of Britons in work grew less than expected, rising by 88,000, about half the consensus forecast in a Reuters poll of economists.
United Kingdom economic growth was been revised down to 0.4 per cent for the final quarter of 2017 in the second estimate of national income produced by the Office for National Statistics.
British government bond prices rose and sterling briefly fell against the USA dollar after Wednesday's figures showed the sharpest rise in the number of people out of work in nearly five years.
But workers are seeing their wages increase, with average earnings up 2.5 per cent a year ago, according to the latest estimates.
Output per hour rose 0.8 per cent during the three month period, following recorded growth of 0.9 percent in the previous quarter. Now, analysts expect that as inflation increases over the course of 2018, more problems will arise in the retail sector.
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Yael Selfin, chief economist at KPMG in the United Kingdom, described the productivity figures as "very encouraging".
The O.N.S. attributed the rise in unemployment to fewer economically inactive people - those neither working nor looking for a job - entering unemployment, rather than employed people losing their jobs. Consumer price growth has remained at 3% ever since, when the Bank of England's target is 2%.
Earnings, excluding bonus, also climbed 2.5 percent annually.
While Thursday's data will inevitably fill a great deal of column inches, it is unlikely to prove a game changer for the Bank of England and Pound Sterling in the months ahead, given that in November the Bank had forecast fourth quarter GDP of 0.4% and not 0.5%.
Meanwhile, growth in the number of EU nationals working in Britain slowed and the number of eastern European workers fell.
Chief secretary to the Treasury, Elizabeth Truss said: "These are strong borrowing figures, which is proof that we are fixing out nation's finances and reducing the burden on future generations".