Unemployment falls to lowest for 17 years

The number of people out of work fell to its lowest level for 17 years yesterday, offering the prospect of a golden period of strong economic growth, low inflation and falling unemployment, writes Tom Stevenson.

Official jobless figures showed an unexpectedly large fall in the jobless rate by 49,800 to 1.55 million, the lowest unemployment rate since September 1980. Despite the rapid rate of job creation, average earnings increased by only 4.25 per cent in the year to July, the same rate as a month earlier. This helped to calm fears that growth in jobs would stoke wage inflation.

That meant that the Bank of England was able to promise a pause in the recent run of interest rate rises. The Bank said the prospects for inflation were looking bright.

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