The number of Britons claiming unemployment benefits fell unexpectedly in November and the number of people in work hit a record high, data showed, raising prospects the labor market will support a moribund economy.
The data will give some relief to the government and policymakers struggling with an economy that only exited recession in the third quarter. Weak business surveys have raised concerns of a relapse.
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"The fact that UK employment is rising, consumer confidence is up, and anecdotal evidence of retail sales haven't been too bad, offers some hope that the domestic situation in the UK is stabilizing," said James Knightley at ING.
Sterling hit a five-week high versus the dollar after the data of above $1.6133. London's FTSE 100 index remained 0.3 percent higher on the day but there was no reaction on gilt markets.
The number of people claiming jobless benefits fell by 3,000 last month and the increase in the previous month was revised down to 6,000 from 10,100, the Office for National Statistics said on Wednesday. Analysts had forecast a rise of 7,000.
On the wider ILO measure, the number of people without a job fell by 82,000 in the three months through October to 2.510 million, the lowest since March-May 2011. The jobless rate stayed at 7.8 percent, in line with forecasts.
"This is a good set of figures. What we've seen is extraordinary resilience by the private sector," Employment Minister Mark Hoban told Sky TV after the release.
Recent business surveys have showed that firms in Britain's dominant service sector increased staffing levels last month but factories reduced headcount.
A separate survey published on Monday showed British firms hired permanent staff through recruitment agencies at the fastest rate since April 2011 last month.
The number of people in work rose to 29.601 million - the highest since records began in 1971.
The positive labor market news will come as a relief for Bank of England policymakers, who decided against another cash boost for the economy last week.
Finance minister George Osborne, who has had been under pressure to ease his flagship austerity program to reduce the budget deficit and instead stimulate growth, will be also buoyed by the data.
The ONS said the number of public-sector employees fell by 24,000 in the third quarter to 5.745 million - the lowest since the first quarter of 2002. The ONS also revised public-sector employment up by around 100,000 per quarter for recent quarters and by less for earlier years due to better data.
Britain will endure more austerity and miss a key debt-cutting goal as the economy looks set to grow far more slowly than previously thought, Osborne said last week when presenting a half-yearly budget statement to parliament.
The latest ONS data also showed that many Britons still faced a squeeze on their finances.
Average weekly earnings including bonuses grew by 1.8 percent in the three months through October. Analysts had forecast a rise of 1.9 percent. Excluding bonuses, pay increase by 1.7 percent.
Both figures were below inflation, which jumped to 2.7 percent in October.
"Such a picture is not supportive for the spending profile in the coming months as households remain under pressure in the current uncertain environment, even if labor markets remain resilient," said Annalisa Piazza at Newedge Strategy.
(Reporting by Olesya Dmitracova and Jonathan Cable; Editing by Jeremy Gaunt)