UK unemployment rose by less than than expected in May and the Bank of England said the risk of a deeper slump has receded, Bloomberg reports.

Claims for unemployment benefits rose 39,300 to 1.54 million in May, the smallest increase since July last year, the Office for National Statistics said.

Signs are mounting that the UK's economy is recovering from the worst recession since 1979, with manufacturing activity rising for a second month in April and services activity expanded for the first time in a year last month, says Bloomberg.

"While the economy may see positive growth at some point later this year, the risk of relapse is still high," James Knightley, an economist at ING Financial Markets in London, told the agency.