LONDON (Reuters) - Britain's unemployment rate fell to its lowest level in more than five years in the first quarter of 2014, helped by a record number of people getting jobs.
Pay growth rose more than inflation for the first time since 2010 but was below forecasts.
The latest signs of recovery in the labour market come shortly before Bank of England Governor Mark Carney was due to explain why the BoE is keeping interest rates at a record low.
The unemployment rate eased to 6.8 percent in the January-March period, its lowest since the three months to February 2009 and down from 6.9 percent in the three months to February this year, the Office for National Statistics said.
Economists in a Reuters poll had forecast the rate would fall to 6.8 percent.
The number of people in employment rose to a new record of 30.43 million in the first quarter, helped by a latest increase in the number of people who are registered as self-employed.
The increase in people finding work of 283,000 was the largest quarterly increase since records began in 1971.
Total pay growth, including bonuses, was unchanged at 1.7 percent in the three months to March.
Economists had expected pay to grow by 2.1 percent.
The increase in pay over the period was stronger than consumer price growth in the month of March which was 1.6 percent. It was first time that pay outstripped inflation by that measure since 2010, the ONS said.
The data will help Prime Minister David Cameron as he tries to convince voters that Britain's economy is back on track as the May 2015 national elections approach.
The opposition Labour party has said the recovery in earnings is still too feeble to offset the fall in living standards since the financial crisis.
Apart from a few one-off months, pay growth has not consistently been stronger than inflation since 2008.
Despite the recovery in pay, undoing the effects of the financial crisis will take time. Britain's independent budget forecaster expects that hourly earnings, adjusted for inflation, will probably lag pre-crisis levels until the end of 2016.
The ONS said that in March alone, total pay rose 1.5 percent.
Excluding bonuses, pay rose 1.3 percent in the first quarter, below forecasts, and by 1.0 percent in March alone.
The number of people claiming unemployment benefits fell by 25,100 - less than expected - to 1.12 million in April. The pace of decline has slowed from last year.
There have been other signs that April was a strong month for employment.
A survey published last week showed that private-sector employers last month took on staff at the fastest rate since at least early 1998.
The strength of the labour market recovery has raised questions about how long the Bank of England should refrain from raising interest rates.
It is due to announce new forecasts and hold a news conference at 0930 GMT on Wednesday. Markets are watching for the Bank’s latest assessment of how much spare capacity there is in the economy, chiefly in the labour market.
The BoE has said it will start to raise interest rates before the slack is fully used up.
The Bank’s original version of its forward guidance policy – under which it said it would not think about raising borrowing costs until Britain’s jobless rate fell to 7 percent - was swiftly rendered obsolete by the plunge in unemployment which began last year.
The BoE said in February it expected unemployment would fall to 6.9 percent in the January-March period.
(Reporting by William Schomberg)
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