"The British economy remains an incredible job creating machine, with employment rising by around 200,000 in the latest quarter to a total of above 31 million for the first time." said Mark Smith, regional chairman at PwC in the Midlands in response to new labour market data.

"The employment rate also rose to a new record high of 73.5%, while unemployment continued its fall to 5.5%, not much higher than before the financial crisis. Vacancies also rose to a record high of 745,000, indicating that it is becoming harder to fill the job openings that are arising.

“There are also more convincing signs than ever before that this extra demand for labour is causing the market to tighten, pushing up regular pay growth to 2.2%. With consumer price inflation stuck at zero, workers are experiencing solid real pay rises for the first time since the recession. This should help to support the domestic economic recovery at a time when international economic prospects remain very mixed.

“The data also poses a puzzle, however, as employment is estimated to have risen by around 0.7% in the first quarter while preliminary GDP estimates showed output growth of only 0.3%. This implies another marked fall in productivity, which is not what you would expect at this stage in the economic cycle. The possibility remains that these GDP growth estimates will be revised up in future years to better match the strength of the labour market data."