Unemployment Rate Falls To Lowest Since 2005

​The number of unemployed people fell by 54,000 to 1.65 million in the three months to May, official figures showed.

Chancellor Philip Hammond said the figures were "proof that the fundamentals of the British economy are strong" and that the UK was adjusting to the decision to leave the EU "from a position of economic strength".

The fall in the jobless figure takes the rate of unemployment to 4.9%, its lowest level in nearly 11 years, according to the Office for National Statistics (ONS).

Slightly more recent figures published as part of the report showed the number of people claiming unemployment-related benefits was 759,100 in June, up by 400 from May.

The ONS said the figures showed the UK labour market continuing to strengthen in spring 2016 - but pointed out that they did not cover the period since the result of the UK referendum.

Meanwhile, a Bank of England summary of business conditions found that uncertainty had "risen markedly" following the vote.

Most firms said there would be no short-term impact on hiring or investment, although a third said these plans would be hit over the next 12 months.

The Bank said that as yet there was "no clear evidence of a sharp slowing in activity".

ONS figures showed the employment rate was at a record high of 74.4%, with 31.7 million people in work for the three months to May - 176,000 more than in the previous quarter.

Average weekly earnings excluding bonuses were up 2.2% year-on-year, down from the 2.3% rate seen in the February-April period.

Paul Hollingsworth, UK economist at Capital Economics, said the unemployment rate was now likely to drift higher, with the Brexit vote causing some firms to hold back on hiring or even cutting back staff.

He said: "The upshot is that these may be the best set of labour market figures for a while."

The figures come a day after Scottish civil engineering firm Dunne collapsed into administration, resulting in the loss of more than 500 jobs.

Meanwhile a survey from Markit (NasdaqGS: MRKT - news) on Wednesday showed pessimism among British households about their financial prospects hit its highest level since January 2014 after the Brexit vote.

The International Monetary Fund has slashed UK growth forecasts in the wake of the poll result, saying the decision throws a "spanner in the works" of global growth.

The Bank of England is expected to cut interest rates next month to try to cushion the economy from an expected Brexit blow.