LONDON (Reuters) - Britain's unemployment rate fell unexpectedly to its lowest in more than a decade in the three months to January, but pay growth worsened in an unpromising sign for the economy ahead of its divorce with the European Union.
The jobless rate fell to 4.7 percent from 4.8 percent, marking its lowest level since the summer of 2005, the Office for National Statistics said on Wednesday. Economists polled by Reuters had expected no change in the rate.
While suggesting Britain's labour market continues to show resilience following June's Brexit vote, figures on wage growth will add to concerns that consumer spending - a main driver of the economy - looks set to weaken as inflation rises.
Total pay growth slipped to 2.2 percent in the three months to January, the weakest since the three months to April last year.
Adjusted for inflation, pay growth halved to just 0.7 percent - the lowest since October 2014.
The figures come a day before the Bank of England announces its interest rate decision for March.
The BoE is watching closely for signs of a quick pick-up in wages that could add to Britain's fast-rising inflation and strengthen the case for an interest rate hike.
Despite the most recent fall, economists largely expect unemployment to rise this year as companies hold off from hiring as they wait for more clarity on the country's future ties to the EU.
The BoE said last month it expected a jobless rate of 5.0 percent in a year's time, lower than its previous forecast of 5.5 percent.
The BoE has said the unemployment rate at which it expected labour shortages to generate significant inflation pressures was probably as low as 4.5 percent, down from its previous estimate of 5 percent.
Data released last month showed consumer price inflation rose to 1.8 percent in the 12 months to January and the BoE expects it to hit its 2 percent target in February before approaching 2.7 percent by the end of this year.
Many private economists expect inflation will surpass 3 percent this year.
(Corrects headline and story to show jobless rate is lowest since 2005, not 1975)