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UK unemployment edges closer to Bank of England threshold

A woman walks past a recruitment agency in central London September 11, 2013. REUTERS/Andrew Winning

By William Schomberg and Christine Murray

LONDON (Reuters) - Britain's unemployment rate fell to 7.6 percent in the three months to September, bringing it closer to the level at which the Bank of England will consider raising interest rates.

The figures, which lifted the pound and pushed government bond prices lower, were released an hour before the BoE was expected to acknowledge the labour market is recovering faster than it recently thought.

The BoE has made unemployment the lynchpin of its plan to keep interest rates at a record low and has said it will not raise them until the jobless rate falls at least to 7 percent.

In August, it said that would probably not happen for another three years but it is likely to bring forward that timeframe with its new forecasts due at 1030 GMT.

The unemployment rate of 7.6 percent represented a fall from the 7.7 percent reported for June-August and was the lowest since the March-May period of 2009.

The number of people claiming jobless benefits fell by 41,700 in October.

September's claimant count was also revised to show a drop of 44,700, the ONS said, making it the largest fall since 1997.

The number of people in work rose 177,000 and the percentage of 16-64 year-olds in employment rose to 71.8 percent.

Philip Rush, UK economist at Nomura noted that unemployment had now fallen 0.2 percentage points since the Bank's last quarterly forecasts.

"Crucially unemployment is coming down for the best of reasons - strong jobs growth," Rush said. "It's a strong report all round."

There have recently been more up-to-date signs of strength in the jobs market. A survey of purchasing managers by financial data firm Markit, published on November 5, showed hiring was its strongest since the survey began in 1998.

The recovery in Britain's labour market is being scrutinized by investors who are sceptical that unemployment will take anything like as long as the BoE forecasts to fall to 7 percent.

Analysts polled by Reuters expect the Bank will say that the rate is now on course to fall to 7 percent by either the fourth quarter of 2015 or the first three months of 2016.

Even as Britain's labour market picks up, many people in work are not seeing an improvement in their living standards.

Average weekly earnings growth including bonuses picked up by 0.7 percent in the three months to September compared with a year earlier.

Excluding bonuses, pay grew 0.8 percent, matching a record low since records began in 2001.

By contrast, inflation in September was 2.7 percent before it fell back to 2.2 percent in October.

(Editing by Christina Fincher)