UK jobless rate falls to three-year low as economy grows

The number of older workers is at the highest level ever seen, says David Freeman from the ONS

The number of unemployed people in the UK fell by 48,000 to 2.47 million between July and September, the Office for National Statistics has said.

The unemployment rate fell to 7.6%, the lowest rate in more than three years.

The Bank of England has said it will not consider raising interest rates from their record low of 0.5% until the unemployment rate falls to 7%.

The number of people claiming Jobseeker's Allowance fell by 41,700 to 1.31 million in October.

Youth unemployment also showed signs of improvement, with the number of jobless 16-to-24 year-olds falling by 9,000 to 965,000.

Prime Minister David Cameron said: "There are now 1.1 million more people in work since the election - more proof our long-term plan for Britain is working."

But Rachel Reeves MP, shadow secretary of state for work and pensions, said: "On average, working people are more than £1,600 a year worse off under this out-of-touch government."

The percentage of 16-to-64 year-olds in employment rose to 71.8%, up 0.3 percentage points from April to June 2013 and up 0.6 from a year earlier.

Analysis

Unemployment down again and growth accelerating combined with inflation not far above the 2% target.

It's a benign backdrop for the Bank of England's latest prognosis on the state of the economy.

The key indicator for the Bank is the unemployment rate - the forward guidance policy states that an interest rate rise will not be considered, barring unforeseen circumstances, till the jobless rate falls to 7%.

The latest figures show it at 7.6%, down from 7.8% when the policy was unveiled in August. There has been a sharp drop in the number of people claiming Jobseeker's Allowance to the lowest level since January 2009. The total in work has gone up again.

But another increase in the number of part-time workers who would rather be full-time is a reminder that the labour market still has some way to go to get back to normal.

The number of people in work rose by 177,000 to 29.95 million, while total pay rose by 0.7% compared to the same three-month period in 2012, the ONS said.

Average weekly pay, including bonuses, rose to £475 per week.

Neil Carberry, director of employment and skills at the CBI, said: "It's clear that pay restraint is continuing to underpin employment growth. We expect wages to pick up next year, but sustained growth must come first to protect jobs."

'Robust improvement'

The figures will be taken as an indication that the UK economy, which grew 0.8% in the third quarter, is continuing to recover.

"The latest UK labour market figures continue to point to a robust and perhaps strengthening improvement," said David Tinsley. UK economist at BNP Paribas.

Jeremy Cook, chief economist at currency brokers, World First, said: "This latest figure will hearten those who believe that the UK economy has now turned a corner. As it stands, the UK is the strongest economy in the G10 and it certainly has momentum."

But other ONS data revealed that 1.46 million people were working part-time because they could not find a full-time job, an increase of 24,000 over the quarter and the highest figure since records began in 1992.

Almost a third of working men are in part-time employment because they cannot find a full-time job, compared with 13% of women.

On the financial markets, shares fell and the pound rose following the release of the jobs data, with investors speculating that the Bank of England may raise interest rates sooner than expected.

Giving his latest quarterly inflation forecast on Wednesday, governor Mark Carney said the UK economy seemed to be recovering faster than expected.

As a result, the Bank's forecasts suggest there is a higher possibility of the unemployment rate falling to 7% earlier than previously forecast.

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