LONDON (Reuters) - The number of people claiming jobless benefits in Britain fell to its lowest since 1975 in March, official data showed yesterday, but there are signs that unemployment could rise as the credit crunch bites.

Employment is running at record levels but experts expect the labour market will suffer as the economy slows this year, potentially creating another headache for out of favour Prime Minister Gordon Brown.

Figures from the Office for National Statistics showed the claimant count fell by 1,200 to 794,300 in March, broadly in line with expectations and leaving the unemployment rate unchanged at 2.5 percent.

However, February's figure was revised to show an increase of 600, its first rise since September 2006 and breaking what had been a 17-month run of falls.

"It seems highly likely that slowing growth and weaker business confidence will exact an increasing toll on the labour market over the coming months," said Howard Archer, an economist at Global Insight.