The number of Britons in work hit a new all-time high late last year and the number of people claiming unemployment benefit fell much more than expected in January, official data showed on Wednesday.
The Office for National Statistics said the number of people claiming jobless benefit fell by 12,500 last month, compared to analysts' forecasts for a drop of 5,000 from December.
(Read More: Why the UK Jobs Number May Be Misleading)
The number of people without a job on the wider ILO measure dropped by 14,000 in the three months to December to 2.501 million.
Meanwhile, the number of people in work rose to 29.730 million - the highest since records began in 1971, perpetuating a puzzle over how a stagnant economy can create jobs.
The ILO jobless rate stood at 7.8 percent, compared with forecasts for a steady reading of 7.7 percent.
British employers plan a modest increase in staffing levels early this year, as optimism in the private sector outweighs deep job cuts eyed in the public sector, a survey for the Chartered Institute of Personnel and Development showed earlier this week.
The ONS said average weekly earnings growth including bonuses slowed modestly to 1.4 percent in the three months through December, in line with forecasts. Excluding bonuses, pay grew by 1.3 percent, slightly undershooting expectations. That was the weakest rise since three months through June 2010.
Wage growth remains well below inflation, which held at 2.7 percent in January for the fourth consecutive month, eroding consumers' spending power and their ability to drive economic growth.