Economists have welcomed rising wage growth, but warned that the UK jobs market could be peaking.
New data from the Office for National Statistics (ONS) showed that the number of people in employment increased by 115,000 to 32.81 million in the three months to June.
The ONS also revealed that those in work have seen their wages increase ahead of inflation, with pay raising by 3.7%, representing the strongest growth in 11 years.
Some commentators have said that the figures are a welcome boost for the UK economy, following last week’s revelation that the economy shrank for the first time since 2012.
Howard Archer, chief economic adviser at the EY Item Club, said: “The pick-up in employment growth in June looks particularly resilient given recent soft UK economic activity, extended Brexit uncertainties, an unsettled domestic political situation and a challenging global economic environment.
“Earnings growth in June was robust, extending the recent stronger performance after there had been some signs that the rate of improvement had been levelling off earlier in the year.”
But some economists have warned that falling job vacancies and the rise in unemployment in the last quarter could take the shine off this wage growth.
Tej Parikh, chief economist at the Institute of Directors said: “While competition has pushed up salaries, thin margins and low productivity may set a ceiling for pay growth.
“Although vacancies remain high by historic standards, the number has been dropping since the start of the year.
“Impressive jobs market data should not lull policymakers into a false sense of confidence.”
Pawel Adrjan, UK economist at recruitment site Indeed, added: “Employer caution is limiting the supply of new vacancies, yet stiff competition for recruits is still driving up wages.
“Given the wider slowdown in the economy, the labour market is holding up surprisingly well.
“But continued falls in vacancies suggest employers are mindful of the broader economic and political risks on the horizon.”
The Government welcomed the increase in employment and wage growth, which were ahead of analyst forecasts.
Amber Rudd, Secretary of State for Work and Pensions, said: “More people in work than ever before means more households across the UK are earning a regular income, and millions more receiving a pay boost thanks to wages rising at their fastest in a decade.”
However, Labour’s shadow chancellor John McDonnell criticised the slump in productivity growth revealed by the new figures.
“This is an absolutely damning indictment of successive Tory governments’ appalling record on productivity.
“With our economy shrinking last quarter, business investment tumbling, and scandal after scandal in the finance sector, it’s clear that the Conservatives cannot be trusted on the economy.”