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The UK unemployment rate fell to 4.0% in August and pay growth eased to a two-year low, but the Office for National Statistics warned that its data should be used with caution.
Unemployment unexpectedly fell from 4.1% the month before, while average earnings including bonuses eased to 3.8% in the three months to August from 4.0% before, and to 4.9% from 5.1% if bonuses are excluded.
But the UK official statistical body said "we advise caution when using the data".
It noted that the labour force survey (LFS) estimates have been affected by increased volatility due to it being able to drum up fewer responses in recent years, meaning that "estimates of change should be treated with additional caution".
The ONS acknowledged that "external sources are suggesting that recent increases in LFS measures of employment are likely to be overstating underlying employment growth".
Therefore it expects underlying changes in the other labour market measures will also be affected.
As such, "the more modest growth we see in alternative employment sources may indicate that unemployment and/or economic inactivity have fallen by less than the LFS has recently suggested".
The LFS, it recommends, should be used alongside workforce jobs survey, claimant count data and the pay-as-you-earn information estimates it also provides.
Claimant count data rose 27.9k month-to-month in September, but August's rise was revised down to just 0.3k from 23.7k initially. Vacancies fell to 841k in the three months to September, from 856k in August, while short-term unemployment fell sharply to 828K in August, from 883k in July, the lowest since September 2022. Redundancies fell again, to 80K in August, from 82K in July the lowest since last September.
Ropey, dodgy, etc
The surprise drop in the unemployment rate was driven by a "ludicrous looking" boom in jobs, said economist Rob Wood at Pantheon Macroeconomics.
Based on the ONS headline unemployment rate, joblessness has barely risen over the past two years, which is "nonsense", he added, with "no other signs that the UK is currently experiencing a massive job boom".
Wood said the "dodgy figures" are "so ropey" that the Bank of England's monetary policy committee will be unable to reliably figure out how spare capacity in the labour market is evolving and "can only hope to pick up long-running trends".
But he says the MPC will be "encouraged by slowing private sector pay growth but perplexed by another drop in the unemployment rate", meaning that a cut in interest rates of 25 basis points at the November MPC meeting "is a racing certainty".
Matt Swannell, chief economic advisor to the EY ITEM Club, said if pay growth continues to cool in the next few months, "the chances of back-to-back rate cuts will also increase".
But he added that ongoing methodological issues with the LFS means the EY ITEM Club "doubts that the labour market is really as tight as the latest data implies" and means headline readings "have to be taken with a pinch of salt".
While pay growth is now well below the peaks seen in the middle of last year, "there is still further to go before it hits the 3%-3.5% rates that the Bank of England views as consistent with hitting the inflation target in the medium-term", he notes, but the data will give the BoE's monetary policy committee "confidence that inflation persistence continues to fade".
** Update: Adds data, quotes **