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Unemployment rate falls to 7.4%

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The number of unemployed people to October 2013 fell to 7.4%, a 0.2% drop since September.
Unemployment rate falls to 7.4%

The latest figures mean 72% of 16 to 64-year olds are employed equating to 30m in jobs, up 0.4% on the previous quarter.

This is the lowest rate since the February-to-April period in 2009, the Office for National Statistics (ONS) said.

Jobless claims have fallen by 299,000 in the past twelve months, the largest annual decline since 1998, said Rob Wood, Berenberg’s chief UK economist.

Wood said: “A huge jobs gain, chunky fall in the unemployment rate and another big fall in jobless claims signals a strong recovery is underway and raises the risk of an earlier rate hike than the BoE have indicated.”

In August, Bank of England boss Mark Carney said the bank will not raise the base rate of interest before unemployment falls to 7%, and warned investors are still expecting rates to rise sooner than is likely.

Wood said the bank may have to reconsider its expectation that unemployment will not hit 7% before Q2 2015 with the first rate hike in Q3 2015.

He countered that the 7% rate will only be used as a trigger to review rates by the Bank of England.

Yesterday, the consumer prices index reported inflation falling to 2.1%, very close to the BoE’s 2% target and Wood said that should fall further in 2014.

Howard Archer, of consultancy IHS Global Insight, said: “This is an extremely strong set of labour market data, indicating that unemployment is currently coming down rapidly in reaction to the economy’s markedly improved performance in recent months and much healthier business confidence.”

He said in total, 485,000 new jobs have been created over the past year.

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