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The UK's unemployment has fallen to 5% for the first time since October 2005, according to the Office for National Statistics (ONS).

It comes after a 20,000 fall in the number of unemployed people between February and April to 1.67 million.

The number of people in work rose 55,000 taking the employment rate to the all-time record of 74.2%.

Over the past year, the ONS said pay, excluding bonuses, rose by 2.3%.

However, this optimism in the jobs market could be short lived, with research suggesting a vote to leave the European Union on 23 June could spark a jobs crisis. Job site CV-Library said 66.1% of recruiters in the UK believe a Brexit would negatively impact the labour market, with over half (55%) of those saying it would be particularly harmful to workers.

Mike Cherry, national chairman of the Federation of Small Businesses (FSB), said: "The unemployment rate is at historically low levels, but this does not seem to be translating into broader business confidence. Clearly there are other factors at play which, although not hitting jobs now, are causing business owners to take a cautious approach.

“Small businesses are already dealing with considerable new cost challenges, including the National Living Wage and pensions auto-enrolment deadlines. Whatever the result of the coming EU referendum – small business will need reassurances that the outcome will not increase the cost of doing business.”

Wales outperforms UK

The ONS figures also revealed that the number of people out of work in Wales dropped 5,000, while the employment rate grew at a sharp pace.

There are now just 73,000 people unemployed in Wales, resulting in an unemployment rate of 4.8% - lower than the UK average of 5%.

First Minister Carwyn Jones said: “The improving employment rate in Wales continues to outperform all other parts of the UK.

“We are now ahead of Scotland, England and Northern Ireland with the fastest growing rate of employment and the sharpest declining rate of unemployment over the last 12 months.

“At 4.8%, the unemployment rate in Wales is lower than the UK average for the third consecutive month, while employment is close to its record highest rate. Meanwhile, inward investment into Wales also continues at historic high levels."