Unemployment figures: Jobless rate at a seven-year low

Unemployment hit a seven-year low today — but there was no sign of the rising wage pressure that could give the Bank of England an itchy finger on interest rates.

The UK jobless rate unexpectedly fell to 5.3% in the three months to September — the lowest since early 2008 — but annual wage growth also slowed to 2.5% in the quarter.

Despite the slowdown, the figures prolong the sweet spot for consumers enjoying the boon of an improving job market and ultra-low inflation, which dipped back into negative territory last month at minus 0.1%.

Threadneedle Street is keeping a close eye on wage growth as it mulls its first rate hike since 2007, although Governor Mark Carney signalled last week that rates may not rise until the end of next year or even 2017.

The number of people in employment rose by 177,000 over the quarter, taking the employment rate to 73.7% — the highest since records began. The number of unemployed fell by 103,000, the biggest quarterly fall for a year.

IHS Global Insight’s Howard Archer said: “We retain the view that the Bank is more likely than not to edge interest rates up from 0.5% to 0.75% around May. This reflects our view that the UK economy will see decent growth over the coming months and inflation will edge slowly up.”