The number of UK workers on payrolls rose by 207,000 between August and September to a record 29.2m, returning to levels seen before the pandemic struck, the Office for National Statistics (ONS) said.
The unemployment rate in the UK shrank 0.4 per cent to 4.5 per cent.
Though unemployment fell, the number of job vacancies in July to September also hit a record high of 1.1m.
The figures showed a surge of 318,000 from its pre-pandemic level, between January and March 2020, and was the second consecutive month that the three-month average had risen by more than one million, the latest figures showed.
Accommodation and food service activities were hit particularly hard, increasing by nearly 59 per cent in the period, or 50,000 – with a number of hospitality businesses battling staff shortages.
“The experimental single-month vacancy estimates recorded almost 1.2 million in September 2021, which is a record high,” the ONS said this morning.
Yael Selfin, chief economist at KPMG UK, said: “The recovery is testing the capacity of the economy to adjust to a new post-pandemic environment, a task made more difficult by the reduced availability of overseas workers.
“Last month’s ending of the furlough scheme could briefly raise the headline unemployment rate, which could average 4.9 per cent for 2021 as a whole, representing a smaller impact than originally expected.
“In August, the headline unemployment rate continued to fall, down to 4.5 per cent in today’s data, while acute skill shortages have pushed vacancies to record levels for a second month in a row in September, as employers struggled to find skilled staff.”
Despite the record vacancies, however, the ONS confirmed that the UK’s labour market is forging ahead with its recovery.
Darren Morgan, director of economic statistics at the ONS, said: “The jobs market has continued to recover from the effects of the coronavirus, with the number of employees on payroll in September now well exceeding pre-pandemic levels.
“Vacancies also reached a new one-month record in September, at nearly 1.2m, with our latest estimates suggesting that all industries have at least as many jobs on offer now as before the onset of Covid-19.”
In terms of pay, Morgan said that the latest earnings have continued to show growth on the year, even after taking inflation into account.
He added: “However, the figures are still being affected by special factors that make it hard to read underlying trends.”
Chancellor of the Exchequer Rishi Sunak said: “As we move to the next stage of our support, it’s encouraging to see our Plan for Jobs working – the number of expected redundancies remained very low in September, there are more employees on payrolls than ever before and the unemployment rate has fallen for eight months in a row.
“We remain committed to helping people find great work, with an extra £500m to support hundreds of thousands back into employment and help the lowest paid to progress in their careers.”