UK unemployment slides, but worries remain

U.K. unemployment continued to fall in the three months to August, hitting its lowest level since October 2008 -- although the growth in employment slowed.

The jobless rate slid to 6.0 percent, the Office for National Statistics (ONS) said on Wednesday, below analyst expectations of 6.1 percent. The number of employed people grew at its slowest pace since March-May 2013, however, expanding by just 46,000 to a total of 30.76 million.

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Commuters at Canary Wharf underground tube station
Chris Ratcliffe | Bloomberg | Getty Images
Commuters at Canary Wharf underground tube station

Wage growth also remained subdued, with average weekly earnings (including bonuses) rising by 0.7 percent over the three months to August. This marked an improvement from the previous period's 0.6 percent increase, but remains far behind inflation - which came in at 1.2 percent for September.

Low pay growth has become something of a stumbling block for the U.K. economy, having lagged the pace of recovery since the economic crisis. Bank of England (BoE) Governor Mark Carney has ruled out a rise in interest rates until there is improved wage growth and productivity in the country.

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This - combined with inflation data for September which came in below expectations, at a five-year low - has pushed back expectations of the first hike in interest rates.

"This morning's U.K. unemployment figure has once again surprised to the downside... and is welcome news, but is unlikely to sway any more MPC (Monetary Policy Committee) members to vote for rate hikes beyond the existing two that have," Angus Campbell, senior analyst at FxPro, said in a note following the release of the data.

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"We wait to see what the release of next Wednesday's minutes reveal but with inflation tumbling, key business and confidence surveys also coming off the boil and wage inflation still subdued, rate expectations for the BoE have been pushed right back."

Analysts at Daiwa Capital Markets said earlier on Wednesday that they did not expect a rise in rates until the second half of 2015.

- By CNBC's Katrina Bishop