Employment at record high, but inflation hits wages

However, workers are unlikely to feel the benefit as the higher pay rates were offset by inflation.

The Office for National Statistics (ONS) said the number of people in work rose by 125,000 to 32.07 million in the three months to June, with the employment rate climbing by 0.3 per cent to a record 75.1 per cent.

Annual growth in wages was 2.1 per cent for April to June, an increase from 1.9 per cent for the previous quarter.

However, real pay fell by half a per cent after inflation was taken into account.

The increase in the cost of living, which rose in response to the Brexit-hit pound, held steady at 2.6 per cent in July, in line with the rate for June.

ONS senior labour market statistician Matt Hughes said: "The employment picture remains strong, with a new record high employment rate and another fall in the unemployment rate.

"Despite the strong jobs picture, however, real earnings continue to decline."

Unemployment fell by a fifth of one per cent to 4.4 per cent for the three months to June, its lowest level since 1975.

The number of people out of work dropped by 57,000 on the quarter to 1.48 million, a 12-year low.

The so-called claimant count fell by 4,200 in July to 807,800.

The number of people working on so-called zero-hours contracts also fell by 20,000 to 883,000 compared to the same time last year.

Employment Minister Damian Hinds said: "These statistics show that record levels of people are in work across the country and earning a wage, which is great news.

"Over the past year the rise in employment has been overwhelmingly driven by permanent and full-time jobs, as employers continue to invest in Britain's strong economy.

"The task now is to build on this success through Jobcentre Plus and our employment programmes so that everybody can benefit from the opportunities being created."

But TUC general secretary Frances O'Grady said: "Rising prices and stagnant pay are a toxic combination for working people. This is the fourth month in a row where wages have fallen behind the cost of living.

"Ministers are sitting on their hands as another living standards crisis unfolds. It's time to boost wages by scrapping the pay restrictions in the public sector, investing in infrastructure, and increasing the minimum wage."

The pound, which saw more falls this week, rallied on the news.

Sterling was up 0.2 per cent against the dollar at $1.28, while the pound flirted with 1.10 euros, up 0.3 per cent.