THE fall in unemployment to a record low has been welcomed by Business West, a not-for-profit organisation which aims to help firms grow in the UK and overseas.

Data released by the Office for National Statistics found that in the three months to December 2016 the UK's employment rate of 74.6% was the highest since records began in 1971.

In the South West unemployment fell by 0.3% to 101,000.

Unemployment in the region now stands at 3.6% compared to the unchanged national average of 4.8%.

Ian Larrard, director of the Swindon & Wiltshire Initiative at Business West, said: “These figures show the jobs market in the South West continued to rally as 2016 drew to a close, with employment levels rising and unemployment falling.

"Our regional labour market remains one of the best performing in the country, and it’s pleasing to see the jobless rate nationally holding steady at an 11-year low.

"The data chimes with the findings of our latest local business survey, which showed workforce levels and recruitment intentions rising in the final months of the year.

“While the labour market remains a source of strength for our economy, there are reasons to be cautious - 2017 looks set to be a year when rising inflation places increased pressures on business costs.

"Furthermore there are some suggestions that in aggregate the jobs market could be edging towards full capacity. In some sectors, and for some job grades, demand is already outstripping supply.

"Our latest quarterly survey also saw business confidence falling to an alarming 4-year low, suggesting that critical uncertainties are still hanging heavy on West Country firms.

“As we near the triggering of Article 50, there are still big question marks for business over the quality of access to EU markets come 2019 and the ease with which they’ll be able to access European workers.

“In the Budget next month, the chancellor would be well advised to do all he can to bolster confidence and reduce the costs of doing business for firms looking to recruit and grow.”

More than 31.8 million adults are in a job nationally - 300,000 more than a year ago - after a quarterly rise of 37,000, while unemployment fell by 7,000 to just under 1.6 million.

That figure is the lowest since the start of 2006, giving a jobless rate of 4.8%, one of the lowest in Europe.

The ONS reported that the number of people on the so-called claimant count fell by 42,400 in January to 745,000, the biggest monthly fall since the autumn of 2013.

ONS said the claimant count figures were likely to be volatile because of the complexities of rolling out Universal Credit, which was launched in 2013 to replace a number of benefits, including Jobseeker's Allowance.

Average earnings increased by 2.6% in the year to December, 0.2% down on the previous month.

Other figures showed that the number of non-UK nationals working in this country increased by 233,000 to 3.48m between October to December 2015 and the same quarter last year.

Non-UK nationals from the EU increased by 190,000 to 2.24m while those from outside the EU increased by 42,000 to 1.24m.

The proportion of people working in the UK accounted for by non-UK nationals has increased from 3.8% to 10.9% since 1997.

ONS senior statistician David Freeman said: "Continued moderate growth in employment has led to a new high in the total employment rate, while the rate for women has reached 70% for the first time on record.

"Overall, the labour market appears to be edging towards full capacity."

The number of people classed as economically inactive has fallen by 31,000 to 8.8m, a rate of 21% of the working population.

The figure includes students, people looking after a relative, on long-term sick leave, taken early retirement or who have given up looking for work.

The number of people in full-time work has increased by 218,000 over the past year to 23m, while part-time employment has risen by 84,000 to 8.5m.

Work and Pensions Secretary Damian Green said: "With employment at its highest rate since records began, and unemployment at its lowest in over a decade, we remain in a position of strength.

"Our ongoing welfare reforms will continue to incentivise work and make sure the system is fair to all those who need it and those who pay for it.

"With youth unemployment down, women in work at record levels and number of disabled people in work increasing too, we're delivering on our pledge to build a country that works for everyone."