UK jobless total falls

The UK's unemployment rate has fallen to its lowest level for two years as the labour market remains strong, according to official figures.

Data from the Office for National Statistics (ONS) showed the number of people out of work in the three months to May fell by 20,000 to 1,474,000, bringing the unemployment rate down to 5%.

However, the ONS also showed the number of people out of work and claiming benefit rose by 1,700 last month to 952,000.

The annual rate of growth in average earnings rose to 3.4% in the three months to May, up from 3.2% in the three months to April.

'Encouraging' figures

The unemployment figures were better than had been expected, and follow a rise in the jobless total - or international ILO figure - last month.

The data also showed that the number of jobs in the economy grew by 101,000 to a new record of 27.91 million people.

However, the rise in the claimant count figure - which is generally considered to be less accurate - means this indicator has now risen for five months in a row.

"The ILO numbers are encouraging -- unemployment down and record levels of employment," said Geoff Dicks, chief UK economist at RBS Financial Markets.

"It is the same story, the labour market is tight but it is not generating wage inflation."

While the average earnings figure rose, economists say the rise is not enough to create damaging inflationary pressure in the economy.