UK unemployment rate drops to decade low

The UK unemployment rate fell to 5.2 per cent in the three months leading up to October, the lowest for nearly 10 years.

This figure is the lowest jobless rate since January 2006, the Office for National Statistics (ONS) has said.

The ONS found there were 31.3 million people in work, 505,000 more compared to the previous year.

Originally, a poll of Reuters economists had predicted joblessness to remain at 5.3 per cent, where it stood in October.

The figures suggest EU citizens working in the UK increased by 324,000 to 2.02 million, whilst non-EU, non-British workers were ‘little changed’ at 1.20 million.

Despite the the decline in unemployment, the pay of workers increased at the slowest rate since the January to March period.

Total pay increased by 2.4 per cent.

David Freeman, ONS statistician, said: “Earnings continue to grow in real terms, although at a slower rate than we have seen in recent months.”

Bank of England governor Mark Carney has said he would like to see earnings grow above three per cent a year before he would increase interest rates.

Michael Martins, economic analyst at the Institute of Directors, said: “The employment rate is at its highest ever level, the unemployment rate is down to its lowest since well before the crash at 5.2 per cent, and youth unemployment - always a tricky problem to solve - continues to fall impressively.

"All of this indicates we are closing in on full employment. What this means for wages and inflation over the next 12 months, however, is less clear. In theory, a tightening labour market should mean wage rises. This is the trend we saw throughout 2015. But wage growth has outpaced productivity for much of this year, and in the last few months pay increases have trailed off."