STORY: Britain's jobless rate just hit its lowest since 1974.

Official data out Tuesday (September 13) showed the unemployment rate fell to 3.6% in the three months to July.

The number of people in employment grew by 40,000

But that was far less than expected, and not a sign of health for Britain's economy, according to experts.

One analyst from global job site Indeed said there were signs the labour market was losing momentum, with people giving up on work.

The economic inactivity rate measures the share of the population who are not in work and not looking for work,

It rose slightly to 21.7% - the highest in five and a half years.

Pay growth also rose more than expected - which showed a shortage of candidates for jobs.

Wages excluding bonuses rose by 5.2% - the highest since the three months to August last year.

Now the Bank of England is worried that tightness in the labour market will add to the recent surge in price pressures.

It raised interest rates the most since 1995 last month to combat inflation.

Policymakers are expected to lift them again later this month.