The unemployment rate also dropped to a 42-year low of 4.5 per cent, as the number of peopel looking for a job fell by 64,000 to 1.49 million in the three months to May, according to the Office for National Statistics (ONS).
At the same time, the number of people employed hit a record high of 32 million, with another 324,000 in work compared to last year.
However, pay growth disappointed with average earnings increasing by 1.8 per cent in the year to May, as income falls further behind inflation.
The cost of living reached 2.9 per cent in the same month, meaning that British households are seeing their budgets squeezed and spending power eroded.
John Hawksworth, chief economist at PwC, said: “The great UK jobs creating machine has kicked into gear again, with employment growth accelerating in recent months after slower growth in late 2016.
“The employment rate is now within touching distance of 75 per cent for the first time ever, while the unemployment rate fell further to 4.5 per cent.”
Low unemployment has traditionally meant higher wages, which means that pay could pick up in the coming months.
However, if wage growth remains low, tha Bank of England is likely to hold off raising interest rates, according to experts.
Ben Brettell, senior economist at Hargreaves Lansdown said: “The UK labour market is becoming increasingly difficult to interpret.
“Conventional economic theory suggests that low unemployment should ultimately lead to upward pressure on wages – but there has been scant evidence of this during the latest squeeze on household finances.
“Perhaps workers simply don’t have the bargaining power they once did.”
More to follow…