The UK labour market is looking stronger than expected, with figures out this morning showing an above-consensus drop in unemployment.
According to the Office for National Statistics, the unemployment rate reached six per cent between June and August, the lowest rate since late 2008.
While analysts were expecting a drop from the previous 6.2 per cent rate, it was greater than had been anticipated – the consensus had predicted it would fall to 6.1 per cent.
Employment figures were up, meanwhile.
During the quarter, 73 per cent of working age people were employed, up from 71.5 per cent a year ago.
Although this is a slow in the rate of growth, it continues the trend that started in late 2011/early 2012, and comes on the back of positive indicators from indices such as the PMI for the rest of the year, suggesting the trajectory will continue.
BNP Paribas' economist Dominic Bryant said: Overall, concerns about conditions in the eurozone and China combined with yesterday’s weaker-than-expected UK inflation print present a clear risk to our forecast for a February hike by the Bank of England.
"However, UK labour data continue to suggest spare capacity in the economy is eroding quickly, which is a challenge to the market pricing of the first hike coming in August 2015."