NEW Government measures like the National Minimum Wage and auto enrolment pensions could make small businesses cautious about increasing staff levels, a sector leader in Worcestershire has warned.

Commenting on the 10,000 increase in unemployment levels between May and July, Judi Brazkiewicz, county chairman of the Federation of Small Businesses, said: "It’s no surprise that unemployment is slightly up for the quarter. Many young people leaving school, college and university will be included in the latest figures. I hope to see that this is a seasonal spike and will level out at we move into the busy pre-Christmas trading season and beyond.

"Employers understand that getting the right people into their businesses is good for business, but with the National Minimum Wage coming on line next April, alongside the final phases of the auto enrolment pension scheme, employers will understandably be cautious when it comes to increasing their overheads.”

FSB national chairman John Allan added: "The jobs market continues to perform well, but recent data suggests employment growth is starting to slow. This goes hand in hand with FSB research which shows although small businesses are increasing headcounts for the 10th consecutive quarter, their confidence is not as strong as in previous quarters. The continuing good news on pay, up by 2.9 per cent this month, shows that businesses are keen and increasingly able to share the rewards of success with their staff.”

Although unemployment rose slightly in the second quarter of the year, so did the number of people in jobs, up 42,000 compared with the first three months of 2015.