The news that unemployment has fallen by more than expected has cheered City economists, charities and union leaders. But some have warned that further job losses are inevitable in the coming months, which could be particularly hard on young people. The number of people out of work fell 7,000 to 2.458 million in the three months to November, and the claimant count dropped by 15,200 to 1.61 million.

Howard Archer, economist at IHS Global Insight

Despite claimant count unemployment falling by a total of 26,000 in November and December, we suspect that it is premature to celebrate the end of rising unemployment. This suspicion is reinforced by the fact that full-time employment still fell appreciably in the three months to November.

We believe that further modest job shedding will occur in 2010. While the economy seemingly returned to growth in the fourth quarter of 2009, we suspect that the recovery will be prone to losses of momentum and that activity will not be strong enough overall in 2010 to prevent further net job losses.

George Buckley, analyst at Deutsche Bank

The jobs numbers were much better. I think it does continue the theme that we have seen a more resilient jobs market during the downturn and so far during the upturn that looks like its continuing to be the case.

Unemployment looks like it has actually turned the corner.

Vicky Redwood, UK economist at Capital Economics

The good news from the labour market was a further drop in claimant count unemployment and the first fall in the wider ILO measure. But after rising in the past couple of months, employment has started to fall again. We still think that the labour market is likely to relapse this year and undermine the economic recovery – which in turn is likely to dampen talk of interest rate rises this year.

Alan Tomlinson, partner at insolvency practitioners Tomlinsons

Today's figures are very encouraging in terms of the medium- and long-term economic outlook but there is more pain in the pipeline in the short term. We were approached by a significant number of businesses in the second half of 2009 and many of these are now terminal. Unemployment could therefore rise again in the months ahead.

It's this long tail of company failures that will need to be worked out of the system before we can say the economy is firmly back on track. Today's figures are hopefully the beginning of the end of the recession.

John Wright, chairman of the Federation of Small Businesses

While we welcome the fact that the figures show that unemployment has fallen, this trend needs to continue over the coming months. The figures show that more people than ever before are working part-time and are trying to find full-time employment.

For the economy to grow, this needs to be made a reality. The run-up to Christmas is a busy time for any business and many small firms, especially in the retail sector, will have taken on seasonal staff to help them through the busy Christmas period. However, small businesses need help to make these seasonal jobs into permanent jobs and the government must lend a helping hand if small firms are to really tackle the challenge of rising unemployment.

Martina Milburn, chief executive of the Prince's Trust

We welcome any fall in youth unemployment levels, but it is too soon to be complacent. One in five young people are still struggling to find a job. Britain is in danger of losing a wealth of young talent if we fail to help them into work.

Paul Kenny, general secretary of the GMB

We may be turning the corner on unemployment with a fragile recovery but those without jobs and young workers are paying a very high price for this bankers' recession.

The multi-millionaire elite who run the finance sector have resumed gorging themselves with bonuses as if nothing had happened. Like the untouchable and unaccountable landed aristocratic elite before them, their grip on political power will have to be similarly ended. This must be an issue at the general election.

Brendan Barber, TUC general secretary

Today's unexpected fall in youth unemployment is very encouraging and shows government action is working, but with nearly a million young people still out of work, there's a long way to go before we can talk about a healthy jobs market.

The first fall in overall unemployment since the recession started shows that government investment is the best way to secure a sustained economic recovery. Cutting back on spending now could still unleash a double-dip recession and send unemployment soaring.

Long-term unemployment is still a huge concern, and it will continue to rise well after the recession ends. Long spells out of work can increase the likelihood of mental health problems and relationship breakdown, and devastate entire communities.