The number of people claiming Jobseeker's Allowance has risen for the sixth month in a row - the longest stretch of increases in nearly 13 years, official figures showed yesterday.
The so-called claimant count rose by 2,800 in July to 866,000, an increase of 27,800 from a year ago, 2.8 per cent of the workforce.
Total unemployment, including people not eligible for benefit, rose by 27,000 over the quarter to June to 1.42 million.
The rise affected mainly women.
The West Midlands seasonally adjusted jobs total hit 96,900, up 1,000, 3.6 per cent of the workforce. The unadjusted equivalent was 97,800, up 2,300, also 3.6 per cent of the workforce.
On the wider rate, West Midlands unemployment was 120,000, down 3,000, 4.6 per cent of the workforce. The East Midlands equivalent was 94,000, up 1,000, 4.3 per cent.
Nationally, the number of people in work fell by 16,000 over the quarter to 28.59 million.
Meanwhile, the number of people classed as economically inactive, including those on early retirement, students or those with caring responsibilities, jumped by 37,000 over the last quarter to 7.9 million.
Manufacturing job losses continued, with employment in the sector falling to 3.2 million in the three months to June. This represented a total drop of 86,000 on the same period a year ago.
Nevertheless, the UK continues to have one of the lowest unemployment rates in the developed world.
Work and Pensions Minister James Plaskitt said: "Compared to this time last year, there are more people working and unemployment is close to flat.
"The number of people claiming incapacity benefits is falling, while for the first time ever there are more than a million lone parents in work."
He said the latest month's figures showed a "more mixed" picture, adding: "Although unemployment has fallen back from an historically high level and unemployment is slightly higher, vacancies remain strong and redundancies are low."
He said the Government was redoubling efforts to help as many people as possible take up new job opportunities as they arise.
TUC chief economist Ian Brinkley said: "The continued shedding of jobs in manufacturing is a key reason why the labour market is weakening. Practical policies to support our manufacturing base - such as public procurement - must be implemented." Presenting the Bank of England's quarterly growth and inflation forecasts earlier this month, Governor Mervyn King said the labour market had softened with the claimant count higher and the number of hours worked lower.
The Bank's Monetary Policy Committee cut rates by a quarter of a per cent to 4.5 per cent.
"The rise in unemployment over the last six months in combination with stagnant retail sales and shrinking manufacturing production shows that the MPC was right to cut interest rates," said Alan Clarke, UK economist at BNP Paribas.
The rise in the claimant count was below the expectations of analysts, who had predicted an increase of around 8,800. The figure of 2,800 came after June's figures were revised downwards.
Economist Jonathan Said, at the Centre for Economics and Business Research, said that with oil prices at record levels, interest rates were likely to remain on hold for the rest of the year.
Ross Walker at the Royal Bank of Scotland said labour market conditions continued to look " reasonably favourable".
He said there was nothing in the figures to radically shift the monetary policy debate.
Liberal Democrat treasury spokesman Vincent Cable said the labour market was "losing momentum".
"These figures are deeply worrying, with higher unemployment likely to have knock-on effects on consumer spending and the fragile housing market.
"It is likely more and more people will be getting into arrears on mortgage payments.
"The UK economy may still be growing but the Chancellor's complacency is starting to become worrying," he said.