Jobless rate rises to 5.1% as wage growth slips back further

Britain’s unemployment rate rose to its highest level for nearly five years and wage growth slipped back further, with young people in particular suffering amid a tough jobs market, official figures have shown.

The Office for National Statistics (ONS) said the rate of unemployment rose to 5.1% in the three months to October, up from 5% in the three months to September.

This is the highest since the first quarter of 2021 – but with the pandemic era stripped out, it is the highest since early 2016.

The ONS said average regular wage growth also pulled back again, to 4.6% in the three months to October, down from an upwardly revised 4.7% in the previous three months, and was 0.9% higher after taking Consumer Prices Index (CPI) inflation into account.

Experts said the easing back in pay increases will reinforce the case for the Bank of England to cut interest rates when it decides on Thursday, as it helps ease policymaker fears over inflation.

The latest figures estimated the number of employees on payrolls plunged by 38,000 – the biggest fall for five years – during November to 30.3 million in further evidence of a weakened jobs market.

The ONS said younger workers were struggling in the difficult hiring climate, with an 85,000 increase in those unemployed aged between 18 to 24 in the three months to October – the biggest rise since November 2022.

Liz McKeown, ONS director of economic statistics, said: “The overall picture continues to be of a weakening labour market.

“The number of employees on payroll has fallen again, reflecting subdued hiring activity, while firms told us there were fewer jobs in the latest period.

“This weakness is also reflected in an increase in the unemployment rate while vacancies remained broadly flat.

“The fall in payroll numbers and increase in unemployment has been seen particularly among some younger age groups.”

The ONS said that unemployment jumped by 47,000 for those aged between 25 and 34, while it was 28,000 higher for those aged 16 and 17.

Across the market, vacancies fell slightly, down 2,000 to 729,000 between September and November.

Martin Beck, chief economist at WPI Strategy, said: “The latest UK labour market data delivered a fresh set of worrying signals, suggesting that a long-running deterioration is still under way.

“With employment under pressure from a fragile economy and pay growth continuing to cool, the figures will provide another reason for the Bank of England’s Monetary Policy Committee to back an interest rate cut this week.”

He added that while there was no repeat of the blow to the jobs market from April’s rise in national insurance contributions (NICs), the recent autumn budget risked compounding troubles.

“Further policy pressures – notably another sizeable increase in the National Living Wage next April and new obligations on employers from employment rights legislation – risk adding strain at a point when the labour market can least afford it,” he said.