Unemployment in the North East has dropped by 11,000 between May and July, the highest fall outside London.
It brings the number of people out of work in the region to 134,000, putting the employment rate at 10.4%.
Some regions saw a rise, meaning the national figure of people out of work fell by 7,000.
The Office for National Statistics (ONS) said the Olympics is thought to have helped drive the drop.
- UK unemployment fell by 7,000
- 134,000 increase in part-time workers - the highest ever
- 1.42m people working part-time because they could not find a full-time job
While the fall in the headline rate of unemployment was lower than many economists were expecting, the drop in the claimant count was far higher than forecast.
Those classed as economically inactive, including those looking after a sick relative, on early retirement or who have given up looking for work, fell by 181,000 to nine million.
John Walker, chairman of the Federation of Small Businesses, said the continued fall in unemployment was good news, but that for the economy to recover at a faster pace more people need to find full-time work.
He added: "Policies targeted at stimulating job creation, such as extending the National Insurance contributions holiday, are needed to give small firms the confidence to create full-time positions and take on staff."
Unison general secretary Dave Prentis said the Government needed a long term plan of jobcreation to ease the UK's economic woes.
He said: "For families suffering the misery of unemployment, any decrease will be welcome news, but it is clear when you look at the bigger economic picture that any talk of growth is premature.
"In areas such as Yorkshire and Humberside, and the West Midlands - where unemployment is already among the highest in the UK - unemployment continues to go up, meaning yet more misery for families struggling to get by."