UK unemployment fell to 7.7 per cent in the three months August though pay increases continue to be well below inflation.
Data from the Office for National Statistics shows unemployment is down 0.1 per cent compared to the previous three months.
There were 2.49 million unemployed people aged 16 and over, down 18,000 from March to May 2013 and down 40,000 from a year earlier.
ONS statistics show 29.87 million people were in employment aged 16 and over, up 155,000 from March to May 2013 and up 279,000 from a year earlier.
Despite more jobs being created total pay rose just 0.7 per cent compared with June to August 2012, well below inflation of 2.7 per cent over the same period.
In the previous three months total pay grew at an annual rate of 1.7 per cent.
Average weekly earnings for the private sector increased by 1.1 per cent but average weekly earnings for the public sector fell by 0.5 per cent, the first time a negative growth rate has been recorded since records began in 2001.
In August 2013 average weekly pay in the private sector was £473, lower than the public sector figure of £484.
Capital Economics predicts the unemployment rate will rise to 8 per cent next year and 8.1 per cent in 2015.
Bank of England governor Mark Carney says he will not increase interest rates until unemployment falls below 7 per cent, barring exceptional circumstances.