The employment rate in the UK rose 0.3% or 184,000 between the first and second quarters of this year, the largest quarterly increase since 1989.
The percentage of people employed in the UK is now 70.5%, the Office for National Statistics estimates. Employment is up 104,000 on the year to 507,000 lower than two years previously. The rise was largely driven by part time workers, the ONS says.
The unemployment rate fell by 0.2% or 49,000 to 7.8%, with a total of 2.46m people out of work. However, the number of long-term unemployed rose, with 33,000 more people out of work for more than 12 months. The total number is now 796,000, the highest figure since the three months to March 1997.
There was also a 1.3% annual growth in total pay between Q2 2009 and Q2 2010, or 1.6% excluding bonuses.
The number of people claiming Jobseeker's Allowance fell 3.8% between June and July to 1.46m.
Despite the overall positive tone of the data, rising unemployment could be in store as public sector cuts start to filter through, warns Capital Economics.
Vicky Redwood, a senior UK economist, says: "The relatively small fall in the timelier claimant count measure of unemployment of just 3,800 in July is a slight cause for concern. This might be a sign that the slowdown in the wider economic recovery is already spreading to the labour market.
"With sharp public sector job cuts looming, we still think that renewed rises in unemployment lie ahead."
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