THE NUMBER of people claiming the dole in Northern Ireland has risen by 1,200, the biggest increase in 22 years, according to the latest jobless figures released by the North's Department of Enterprise, Trade and Investment.

The number of people claiming unemployment-related benefits increased to 28,900 in September, with job losses in the construction industry accounting for 60 per cent of the rise. The unemployment total is now at its highest since February 2005.

The Northern Ireland seasonally adjusted unemployment rate was estimated at 4.3 per cent for the period from June to August.

This represented a slight increase from the rate of 4.1 per cent recorded in the previous quarter and was also higher than the rate of 3.7 per cent recorded during the same period last year.

Despite this, the North's unemployment rate remained below the UK average (5.7 per cent) and was also lower than the rates recorded for the EU (6.8 per cent) and the Republic (5.9 per cent) in July.

Seasonally adjusted estimates for the same period showed there were 788,000 people in employment in the North. This represented a fall of 0.9 per cent in employment levels over the quarter, but a rise of 1.5 per cent over the year.

The percentage of people of working age who are "economically inactive" is 26.7 per cent, considerably higher than the UK average rate of 20.9 per cent and the highest of all the UK regions.

Minister for Enterprise, Trade and Investment Arlene Foster said the figures, while disappointing, were not entirely unexpected.

"The slowdown in the housing market and wider construction industry in particular is having a large impact, with former construction workers accounting for the majority of the rise in benefit claimants during September."

The latest Index of Services quarterly survey in Northern Ireland reports that the service sector, the economy's largest sector, decreased by 0.9 per cent in the last quarter, the fourth consecutive quarter of declining output.

The slowdown in output was most apparent in the two sectors that have provided the most employment in the North over the past decade - business services, and finance and distribution, said Ulster Bank economist Richard Ramsey. This indicated that the record level of jobs recorded earlier in 2008 in Northern Ireland had reached its peak, he added.

"While Northern Ireland's level of unemployment is set to rise quite significantly, it is important to keep this in perspective," he said. "The economy is not going to return to the double-digit rates of unemployment that were experienced in the early 1990s."

Ms Foster had some good news on the jobs front yesterday, however, with her announcement that North American telecommunications company BTI Systems is to establish a £6 million (€7.7 million) European headquarters and software centre in Belfast, with financial assistance of £660,000 from jobs promotion agency Invest NI.

"BTI Systems will create 60 high-quality software engineering posts over the next three years, delivering an additional £2.3 million annually in wages and salaries into the local economy," she said, adding that it was "particularly pleasing to secure the project in such difficult global economic conditions".