The number of Britons claiming unemployment benefit fell last month for the first time since July, but analysts said government spending cuts mean it may not be long before it starts rising again.
The Office for National Statistics said the number of people claiming unemployment benefit fell by 3,700 in October confounding expectations for a rise of 5,000. There was also a downward revision to September's rise in the claimant count - to 1,300 from the 5,300 initially reported.
The number without a job on the wider ILO measure, which includes those looking for work but not claiming benefits, also declined, falling by 9,000 in the three months to September to 2.448 million.
The jobless rate remained steady at 7.7%, as expected, matching its lowest rate since May 2009. Employment rose by 167,000 to 29.19 million, its highest total since February 2009.
While the figures suggest Britain's labour market has recovered somewhat from the soft patch experienced at the start of the summer, analysts said painful government cuts could cause the jobless rate to rise in the coming months.
Britain's government will cut 490,000 public sector jobs over the next four years as part of an austerity drive aimed at cutting a record peacetime budget deficit. Finance minister George Osborne is banking on the private sector creating extra posts to help make up for the loss of state jobs.
Wage growth picked up from recent low levels but remained below inflation. Consumer price inflation rose to 3.2% in September, more than a percentage point above the Bank of England's 2% target, while retail price inflation is running even higher at 4.5%.
Average weekly earnings excluding bonuses rose an annual 2.2% in the three months to September, the fastest rate since the three months to March 2009.
