The proportion of the labour force out of work fell to a new four-decade low in February, surprising economists who had expected the rate to stay steady.
Unemployment fell from 4.3 per cent in January to only 4.2 per cent in the three months to February, according to data published today by the Office for National Statistics, the lowest level since 1975.
Employment, the proportion of all working age adults in work, rose to 75.4 per cent, the highest since records began in 1971.
The new fall in unemployment has coincided with a sharper increase in wages, which grew by 2.8 per cent (both including and excluding bonuses) in the year to February.
Unemployment has fallen steadily in the UK since peaking at 8.5 per cent at the end of 2011, as the global financial crisis led to workers being laid off.
Another 16,000 people gained jobs in February, while 15.17m women are now employed, a record high.
Tej Parikh, senior economist at the Institute of Directors, said: “The labour market continues to be a bright spot for the UK economy. Businesses are creating new jobs, unemployment is at its lowest in 42 years, and workers will be reassured now that the worst of the squeeze on real pay packets appears to be behind us.
"The big question is whether the forward momentum on hiring and wage growth can be sustained," he added.
Some economists warn that the headline figures do not account for a significant increase in part-time work rather than full-time, a possible reason for the recent lack of strong wage growth.