The number of people out of work and claiming unemployment benefit in the UK has fallen back to its lowest level since the mid-1970s, the latest official figures have shown.

The claimant count unemployment rate fell by 7,000 in May to 944,600, meaning the unemployment rate is now down to 3.1%.

The fall was in line with expectations, and followed a surprise rise in the claimant count figure in April.

Separate figures showed that average earnings growth rose to 3.3% in April, up from a 2.9% rise in the previous month.

"These are very encouraging figures," said Employment Minister Nick Brown.

"The claimant count has fallen further and there are more people in work in our country than ever before."

But under the International Labour Organisation's (ILO) definition of unemployment, which includes those out of work but not claiming benefits, the number of people out of work in the UK is rising.

The ILO unemployment count rose by 19,000 between February and April, pushing the rate up from 5.1% to 5.2%.

Inflation worries?

The rise in average earnings was slightly higher than the 3.2% increase forecast by analysts.

But the increase came in below the 4.5% threshold which the Bank of England believes is the maximum level compatible with low inflation.

"These numbers are fairly neutral for rates," said Philip Shaw at Investec.

"The fall in the claimant count probably reflects stronger economic growth in the second quarter and is not a worrying figure because the extent of the fall is not large enough to spark inflation."

But other analysts were more worried about how inflationary pressures may build as the UK economy begins to pick up.

"The combination of an unexpected (albeit small) fall in unemployment and higher-than-expected earnings is uncomfortable," said Geoffrey Dicks at RBS Financial Markets.

"The earnings numbers are not yet flashing amber - and the underlying earnings number was good - but the recovery starts with an already and worryingly tight labour market."