The pressure on employers to find skilled staff appeared to push up wages by more than expected in November as job vacancies reached a new peak.
The Office for National Statistics also said the employment rate, which measures the proportion of 16- to 64-year-olds in work, reached 75.3%, the joint highest since comparable records began in 1971.
City economists had expected the uncertainty surrounding the Brexit talks to limit wage rises, excluding bonuses, to 2.3%, the same rate as in October, but the ONS said the increase was 2.4%, rising to 2.5% when bonuses were included.
Vacancies hit the highest level since comparable records began in 2001, up 60,000 on a year earlier at 810,000.
The ONS said most of the increase in employment came from a rise in full-time employment at the expense of self employment. It said 2017 marked a turning point in self employment, which has risen every year since 2000, as employers seek to put workers on full time contracts. Self employment fell slightly to 4.77m.
However, pay growth continued to lag November’s inflation rate of 3.1%, indicating that Britain’s workforce lacks the bargaining power to prevent living standards slipping backwards.
In the period June to September much of the rise in employment came from a jump in hiring by public sector and in particular a recruitment drive by the National Health Service.
Chris Williamson, chief business economist at IHS Markit, said the figures showed the UK labour market showed signs of strength late last year, with employment rising and pay growth “creeping higher”.
He said: “The data corroborate business survey evidence which indicated that the economy maintained a solid pace of expansion towards the end of 2017.
“Pay growth nevertheless continues to run below inflation, squeezing consumer spending power and dampening households’ views on their financial wellbeing in January. Under such conditions, it seems likely that the recent disappointing consumer spending trend will persist into 2018, restraining economic growth.”