UK unemployment continues to fall

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The number of people seeking jobless benefits in the UK has fallen to a 32-year low, according to data from the Office for National Statistics.

The number claiming jobseeker's allowance fell by 11,100 in November to 813,000, the lowest since June 1975.

Total unemployment, including those not claiming benefit, fell 15,000 to 1.64 million in the three months to October.

Average earnings increased by 4% in the year to October, down 0.1% from the previous month's rate.

Relief on inflation

Both sets of data may ease inflationary pressures.

Last week, the Bank of England cut interest rates from 5.75% to 5.5%, amid fears of the impact of the US housing crisis and global credit crunch on the UK market and economy.

The rate cut was the first since August 2005 and the lack of inflationary pressure indicated in this latest report makes it easier for the central bank to cut rates again, one analyst said.

"The UK labour market data show that the recent strength of economic growth is still supporting labour market activity, and without prompting faster pay growth," a note from Capital Economics said.

Lack of bonuses kept earnings low. Capital Economics added:"The bonus contribution should fall in the next few months as financial sector bonuses take a hit."

Other analysts voiced scepticism as to how long the good news could continue for, given the shaky global economic outlook.

"It's an encouraging combination of lower unemployment and weaker earnings growth, but I'm not sure how long it can be sustained. A weaker jobs market next year looks likely," said Deutsche Bank's George Buckley.