The number of people claiming jobless benefit in Britain fell to its lowest in more than a year in June, while the number of people in work jumped the most in almost four years, official data showed today.
The figures also showed a marked slowdown in earnings growth, which should reassure Bank of England policymakers that rising prices are not yet feeding through into pay demands.
The pound rose against the dollar and euro after the figures, which suggested Britain's labour market is continuing to recover as the economy emerges from recession.
The Office for National Statistics said the number of people claiming jobless benefit fell by 20,800 in June, its fifth consecutive monthly fall and a slightly bigger decline than the 20,000 analysts had forecast. That pushed the claimant count rate down to 4.5 per cent, the lowest since March 2009.
The number of people without a job on the wider ILO measure fell by 34,000 to 2.468 million in the three months to May. That took the jobless rate to 7.8 per cent, the lowest since January and below forecasts for a reading of 7.9 per cent.
However, the fragile economic recovery faces headwinds from government spending cuts later this year that are likely to lead to thousands of lay-offs in the public sector.
"The UK labour market has perked up a bit, but we still doubt that private sector hiring will pick up strongly enough to offset the severe public sector job cuts," said Vicky Redwood of Capital Economics.
The number of people in work rose by 160,000 in the three months to May, the biggest rise since August 2006, but the increase was mainly due to a record 148,000 rise in the number of part-time workers, suggesting companies may be reluctant to commit on a long-term basis.
That meant that a record high 27 per cent of those employed are working part-time.
Reuters