UK unemployment falls below two million

The UK unemployment total has fallen below two million for the first time in almost six years, official figures show.

The number of jobless people fell by 154,000 to 1.97 million in the three months to the end of August, the Office for National Statistics said.

The drop, which is bigger than analysts expected, took the unemployment rate to 6%, its lowest level since late 2008.

But wage growth remained stubbornly below the current 1.2% inflation rate.

In total, there are now 30.76 million people in work.

Chancellor George Osborne said the fall in unemployment was "evidence that our long-term economic plan is working".

"I'm the first to say there are still too many people out of work. We need to make further reforms to our welfare system so that people have a life of work, rather than a life on the dole," he added.

The proportion of people aged between 16 and 64 in work is now 73%, close to its all-time high of 73.2%.

The number of people in employment rose by 46,000 over the three months, which was the weakest quarterly gain since May last year. Economists said this suggested the economic recovery could be slowing.

"The UK labour market remains strong. However, there are some areas of concern such as the slowest increase in employment for 15 months, which suggests that the pace of economic growth is easing," said British Chambers of Commerce (BCC) chief economist David Kern.

Over the year to the end of August, the number of unemployed people fell by 538,000, the largest annual fall since records began.

But the number of people choosing not to seek work increased.

Those classed as economically inactive, such as students, long-term sick and those retiring early, increased by 113,000 in the quarter to more than nine million.

Average weekly earnings in the June-to-August period, excluding bonuses, rose by 0.9% from a year earlier. Including bonuses, earnings rose by 0.7%, well below inflation, which is currently running at 1.2%.

"Real pay continues to drop, carrying on the trend that began six years ago. Weak pay is bad news for household budgets, but also for the levels of income tax receipts and the UK's fiscal position," said Martin Beck, senior economic advisor to the EY ITEM Club.

Shadow work and pensions secretary Rachel Reeves criticised the weak growth in wages. "Wages still well behind inflation. The pay squeeze on working people continues," she tweeted.

But the chief secretary to the Treasury, Danny Alexander, said: "Britain is fast becoming the job creation capital of the Western economies. Because our recovery plan is working, so is the country and in record numbers."

Other key figures included show: