Fall in jobless set to boost incoming Bank Governor

Signs of recovery in the jobs market will add more fuel to hopes of an economic revival this week even as workers' salaries fail to keep pace with inflation.

Economists predict a 5,500 fall in jobseeker's allowance claimants last month, taking the total number of people on the dole to a two-year low of 1.51 million in May. Headline unemployment is expected to stay close to the current 2.52 million in the quarter to April, but experimental monthly figures compiled by the Office for National Statistics signal much stronger recent improvement in the labour market.

The numbers suggest that unemployment stood at 2.61 million in January, but fell to 2.37 million in March – much lower than the 2.52 million average for the first three months of the year.

This could bring the jobless rate below the current 7.8 per cent, according to Investec chief economist Philip Shaw. He said: "Last month's drop in the unemployment rate was a welcome surprise. Positive economic momentum may result in still better numbers this time."

The green shoots follow signs of faster growth from services, manufacturing and building firms in May, and recovering high street spending – dampening expectations that the incoming Bank of England Governor, Mark Carney, will seek to add more stimulus when taking over next month.

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