The UK’s unemployment rate has climbed to 5% in the three months to September, its highest level since early 2021, according to the Office for National Statistics (ONS). The increase, which exceeded forecasts of 4.9%, suggests the labour market is softening and has strengthened speculation of an interest rate cut in December. Average pay growth slowed slightly to 4.6% during the period, down from 4.7% in the previous quarter.
The ONS said the data points to a weakening employment landscape, with unemployment rising to a post-pandemic high. While vacancies rose marginally by 2,000 to 723,000 between August and October — the first increase in over three years — overall hiring remains subdued. Payroll figures showed a fall of 180,000 jobs over the past year, reflecting a more cautious approach from employers amid economic uncertainty.
Public sector wages grew by 6.6% compared to 4.2% in the private sector, though experts warned that growth in public pay is nearing its peak due to fiscal pressures. Economists suggested that as more people seek work, wage growth could slow further.
Political figures clashed over the figures, with ministers insisting the economy is still creating jobs, while opposition parties blamed government policy for stifling business confidence and undermining job creation.
