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Unemployment rate falls to seven-year low

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Unemployment in the UK has fallen to its lowest level since 2008, according to official figures.

The jobless rate for the July to September period was 5.3%, down from 6.0% a year earlier, and the lowest level since the second quarter of 2008, the Office for National Statistics (ONS) said.

There were 1.75 million unemployed people in the July-September quarter, 103,000 fewer than for April to June and 210,000 fewer than for a year earlier.

Wages are still on the rise, with pay rising by 3% including bonuses, exactly the same growth rate as the last reading.

Wages rose by 2.5% excluding bonuses, slightly down from the 2.8% recorded last month.

The latest figures present the Bank of England with a “conundrum” about when to increase interest rates, according to Laith Khalaf, senior analyst at Hargreaves Lansdown.

He said: “Unemployment now stands at its lowest level since before the ravages of the financial crisis, signalling an economy which has already done a great deal of healing. This picture looks even brighter when you consider we are now also seeing a significant rise in wages, which should be further boosted by the introduction of the national living wage next April.

“While inflation is close to zero this presents a conundrum for the Bank of England. On the one hand, the recovery in the labour market suggests interest rates should rise, on the other, Mark Carney is currently writing monthly letters to the Chancellor to explain why inflation is so far below target.

“The natural reaction to two such competing forces is maintenance of the status quo, which is why we shouldn’t pencil in a rise in interest rates for some time to come. The market currently anticipates a rate rise in the middle of next year, though for the last six years the market forecast has been woefully ahead of the curve.”

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