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London British unemployment slid to the lowest in 5½ years and the number of people in work rose to a record as the economic recovery strengthened.
The jobless rate fell to 6.5 percent in the three months through May, the lowest since the fourth quarter of 2008, from 6.6 percent in the period ending in April, the Office for National Statistics said in London Wednesday. Jobless claims, a narrower measure of unemployment, fell 36,300 in June from May, more than economists forecast.
Bank of England Governor Mark Carney put the labor market at the center of policy making earlier this year, saying officials can keep the key rate at a record-low 0.5 percent until more slack has been used up.
While unemployment continues to fall and figures Tuesday showed inflation accelerating, separate data Wednesday showing pay rising at its slowest pace for five years may give policymakers breathing space.
Wednesday's data "suggest the improvements will continue," said David Tinsley, an economist at BNP Paribas in London and a former BOE official. "For monetary policy the signs that the labor market is heading nearer capacity is further sign that a footstep on the road to normalization cannot be delayed for too long."
In the three months to May employment rose 254,000 to 30.6 million, the highest level since records began in 1971. The increase was led by a 231,000 surge in the number of full-time workers. From a year earlier, employment rose 929,000, or 3.1 percent, the biggest annual increase ever.
Economists had forecast the jobless rate measured by International Labour Organization methods would decline to 6.5 percent, based on the median of 33 estimates. Jobless claims were forecast to fall 27,000.
Single-month figures showed the ILO jobless rate fell to 6.2 percent in May, the lowest since September 2008, from 6.4 percent in April. That raises the prospect of a further fall in unemployment in the second quarter.
The ILO jobless total fell 121,000 to 2.12 million in the three months through May from the period through February, with youth and long-term unemployment both declining. Jobless claims have fallen for 20 consecutive months and are now at their lowest since October 2008. In May, they declined 32,800 instead of the 27,400 previously estimated.
Wage growth in the three months through May slowed to 0.3 percent, the lowest since May 2009, from 0.8 percent in April. Wage growth excluding bonus payments slowed to 0.7 percent, the least since records began in 2001, from 0.9 percent.
The ONS said the figures continue to be depressed by strong growth a year earlier, when bonus payments were deferred to take advantage of a cut in the top rate of income tax that took effect in April 2013. In May alone, wages rose 0.4 percent from a year earlier following a drop of 1.5 percent in April. Regular pay growth quickened to 0.6 percent from 0.5 percent.
In Parliament Wednesday, Prime Minister David Cameron said it was "disappointing" pay isn't rising faster as opposition Labour Party leader Ed Miliband insisted living standards aren't rising for most people.
Policymakers are watching pay and employment data as they try to gauge the amount of spare capacity - the economy's room to grow without sparking faster inflation. Deputy Governor- designate Nemat Shafik said this month the central bank will probably revise down its estimate of slack in August as officials' focus shifts to the timing of the first rate increase in seven years.
Thirty-four percent of economists say the BOE will raise the benchmark rate by December, a Bloomberg survey of 50 economists published this week shows. Futures contracts are pricing in a quarter-point rise by February, Sonia rates show.
With assistance from Harumi Ichikura and Mark Evans in London.
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