A REVIVAL in full-time hiring by the private sector saw a record rise in numbers of people in work in the opening months of the year, cutting unemployment to three-decade lows.

But the buoyant conditions in the nation’s job market also prompted the sharpest increase in pay growth for nearly three years.

The strength of the official figures for the labour market increased City expectations that the Bank of England would bring a further rise in interest rates early in May.

Employment across Britain jumped by 183,000 in the three months to February, according to the Labour Force Survey (LFS), ministers’ preferred gauge of employment figures. The rise in numbers in work was the biggest for more than ten years and pushed total employment to 28.33 million.

Unemployment tumbled, according to the LFS, by a further 33,000 in the three-month period, while the number of people claiming jobless benefits dropped by 4,200 in March to 882,000, the lowest since September 1975.

Economists noted that, in contrast with recent months when the public sector and part-time work had kept the jobs market booming, private firms accounted for the bulk of the employment gains, with half the new posts full-time.

Worries over wage inflation were stoked as strong bonus payments helped to trigger a jump in headline average earnings growth to 4.9 per cent in February, well above the Bank’s 4.5 per cent “comfort level”.

Private sector earnings growth hit 5.1 per cent, the fastest rate since July 2001, while the pace of pay rises in the public sector remained robust but stable at 4.2 per cent.

The wage data also confirmed that services are leading the economy’s recovery, with the bonuses driving average earnings higher being paid mainly in this sector. Wage growth in private sector services accelerated to 5.5 per cent.