Unemployment rate falls to 4.3 per cent

UK unemployment fell by 75,000 in the three months to July, bringing the jobless rate down to 4.3 per cent from 4.4 per cent in the previous quarter, according to figures from the Office for National Statistics (ONS).

The figures reveal that although the rate remains at its lowest since 1975, a squeeze on incomes continues.

Wages in the period were up by 2.1 per cent from the year earlier.

With inflation hitting 2.9 per cent in August, wages are failing to keep up.

Wages dropped by 0.4 per cent in the three months to July in real terms.

The data could further divide the Bank of England’s Monetary Policy Committee which sets interest rates.

While stagnating wage growth suggests the current surge in inflation could ease, growth in job hires points to greater strength in the economy.

Unemployment is also below the level which the Bank expects to trigger faster pay growth.

Matt Hughes, a senior ONS statistician, said: “Another record high employment rate and a record low inactivity rate suggest the labour market continues to be strong.

"In particular, the number of people aged 16 to 64 not in the labour force because they are looking after family or home is the lowest since records began, at less than 2.1 million.

"Despite earnings rising by 2.1 per cent in cash terms over the last year, the real value of people's earnings is down 0.4 per cent.”