The UK unemployment rate fell to its lowest level in over a decade in May, according to official figures released by the Office for National Statistics (ONS) on Wednesday (20 July).

The UK unemployment rate fell to its lowest level since the period between July and September 2005, after declining from 5% to 4.9% in May and compared with forecast for an unchanged reading. In the corresponding period last year, the unemployment rate stood at 5.6%.

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Meanwhile, the number of unemployed people in the UK fell by 54,000 to 1.65m between March and May, compared to the previous three months.

Unemployment fell by 201,000 compared to the corresponding March to May period in 2015. The figure was also the lowest on record since the period between March to May in 2008.

"Today's employment and wage figures are proof that the fundamentals of the British economy are strong," said the Chancellor Philip Hammond.

The ONS added the number of people in work rose by 176,000, as the employment rate held steady at a record high of 74.4%. Earnings, excluding bonuses, rose by 2.2% compared with last year.

John Hawksworth, chief economist at PwC, said that while the figures showed the UK labour market was in rude health in the lead-up to the referendum on the European Union, the impact of the Brexit vote could soon change the picture.

"It is too early to say for sure how the vote to leave the EU will affect this healthy picture, but at least we are starting from a position of strength," he said.

"Some business surveys suggest a pause in hiring activity since the referendum, but we will not get official labour market data relating to the post-referendum period until September."

Paul Hollingsworth, UK economist at Capital Economics, indicated he still expected the Monetary Policy Committe to follow through with its commitment to ease policy at its next meeting on 4 August.

"Support from policymakers in the near-term should help the economy avert a deep recession and prevent the labour market from deteriorating too much over the next couple of years while the economy slows," he said.

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