The rate of UK unemployment rose to a four-year high of 5.1% in the three months to October, as the labour market showed signs of further weakening before last month\u2019s budget.<\/p>\n
The Office for National Statistics said the jobless rate was the highest since January 2021 \u2013 but with the pandemic era stripped out, it was the highest since early 2016.<\/p>\n
Analysts said the rise in the jobless rate made it almost certain that the Bank of England would cut interest rates when policymakers meet on Thursday.<\/p>\n
The central bank has said it wanted wages growth to fall further before reducing the cost of borrowing again this year. The latest figures showed wage growth excluding bonuses fell to 4.6% in October, from 4.7% the previous month, the lowest since early 2022.<\/p>\n
The ONS also estimated the number of employees on payrolls plunged by 38,000 during November to 30.3 million \u2013 the biggest fall for five years and worse than had been expected.<\/p>\n
The number of people receiving unemployment benefits also increased, indicating lay-offs by employers were also a factor in the latest figures. The claimant count edged up to 1.696 million from 1.686 million in August.<\/p>\n
Economists polled by Reuters had anticipated the rise in the unemployment rate to 5.1% in October, up from 5% in the previous month.<\/p>\n
The ONS said younger workers in particular were struggling in the difficult hiring climate.<\/p>\n
Suren Thiru, the economics director at the ICAEW accountancy body, described the jobs market as \u201cunravelling\u201d in response to a \u201cslumping\u201d economy. Figures last week showed GDP fell unexpectedly<\/a> by 0.1% in October.<\/p>\n He said: \u201cThe UK\u2019s jobs market visibly buckled ahead of the budget as the unrelenting uncertainty from a torrent of policy speculation and a slumping economy forced more firms to reduce recruitment and curb wage settlements.<\/p>\n \u201cThe concerning pace at which the labour market is unravelling means that an interest rate cut on Thursday looks inevitable as these figures will undoubtably aggravate concerns over the strength of economic conditions.\u201d<\/p>\n The Bank of England is expected to cut the cost of borrowing from 4% to 3.75% in response to the weakening jobs market.<\/p>\n Ashley Webb, a UK economist at the consultancy Capital Economics<\/a>, said the Bankwould expect average wages to fall nearer to 4% before cutting interest rates, but it \u201cwill take comfort from the more significant continued slowdown in its preferred measure of regular private sector pay growth\u201d.<\/p>\n The lobby group for retail businesses, the British Retail Consortium, said its members had been hit hard by rising costs, forcing them to make significant job cuts.<\/p>\n The British Chambers of Commerce said: \u201cThe latest data reflects what businesses tell us \u2013 they are less confident about hiring staff due to sky-high employment costs and a tidal wave of new employment legislation coming down the track.\u201d<\/p>\n Private sector pay growth was 3.9% in the three months to October compared with 4.2% in the three months to September.<\/p>\n Public sector pay growth rose from 6.6% to 7.6% over the same period, but much of the increase related to the year before when inflation was at a much higher level. Several big public sector pay awards have been agreed as much as a year in arrears.<\/p>\n The work and pensions secretary, Pat McFadden, said: \u201cThere are over 350,000 more people in work this year and the rate of inactivity is at its joint lowest in over five years, but today\u2019s figures underline the scale of the challenge we\u2019ve inherited.\u201d<\/p>\n Unemployment has been rising steadily since December 2023 when the unemployment rate was 3.9%. By the time of the general election in July 2024 it was 4.2%, before rising to 5% in the three months to September 2025.<\/p>\n A recent study by the Resolution Foundation found that young people had borne the brunt of rising joblessness<\/a>, with an extra 415,000 people under the age of 26 swelling the unemployment figures from October 2020 to September 2025.<\/p>\n Wages have remained higher than inflation for much of the past two years, although much of the extra disposable income, especially at the top half of the income scale, has been saved rather than spent.<\/p>\n