According to figures released today by the Office for National Statistics, 39,000 people claimed unemployment benefit in May, but analysts had been expecting as much as 60,000.
However experts say it is too early to talk of a turnaround. The number of people in work fell by 271,000 to 29.1 million in the last three months, the largest quarterly drop since records began in 1971.
Hugo Sellert, head of economic research at Monster, said: "Employer demand for workers still falls way short of recent years' levels. Most indicators suggest that the UK economy remains stuck in a deep recession."
David Kern, chief economist at the British Chambers of Commerce (BCC) said: ""These jobless figures are slightly better than feared, but the overall situation remains grim. It is much too early to talk about the end of recession."
Official unemployment is now 7.2%. The UK employment rate is 73.3%, down 0.8% from the previous quarter.
Despite reports at the start of June, that the worst of recession might be over, this latest news comes as the BCC predicted yesterday unemployment will rise to 3.2 million - or 10% of the workforce - by the secod half of 2010.