UK jobless figure still falling

UK unemployment fell by 9,000 in the three months to April to 1.43 million compared with the previous three months, official figures have shown.

The Office for National Statistics also showed the number claiming unemployment benefit dropped by 12,000 to 862,000 in May, the lowest level since 1975.

Average earnings growth fell to 4.3% in the three months to April, down from the previous figure of 5.2%.

The earnings growth dip was due to City bonuses dropping out of the figures.

However, if bonuses are excluded, the figures showed wage growth rising to 4.1% in the three months to April from 3.9% before.

"The fact that the ex-bonuses numbers are picking up is an indication of the tightness in the labour market," said Peter Dixon, economist at Commerzbank.

Rate rise

Ross Walker, an economist at RBS Financial Markets. warned that the earnings figure was set to rise in the coming months, which could trigger further interest rate rises.

"Look for headline earnings growth to rebound in the months ahead to the high-4s or even low-5s, enough to keep the MPC on their toes and support the aggressive rate hike profile priced in by futures markets," said Ross Walker, economist at RBS Financial Markets.

"We still look to August's meeting for the next 25 basis point rate hike (in interest rates), but a rise in July cannot be ruled out completely."

Despite the continued fall in the unemployment total, the ONS figures showed that some sectors are continuing to contract, most notably manufacturing.

The number employed in manufacturing fell to 3.38 million people, the lowest amount since records began in 1978, after losing 108,000 jobs over the past year.

Overall, the total number of people in work rose to 28.3 million in April, a rise of 30,000 over the quarter.