Introduction: UK unemployment hits 5%, first time since 2021<\/p>\n
Good morning, and welcome to our rolling coverage of business, the financial markets and the world economy.<\/p>\n
The weakening in Britain\u2019s jobs market has gathered pace, with new data showing the jobless rate has hit its highest level since the Covid-19 pandemic.<\/p>\n
The UK unemployment rate has jumped to 5% in the July to September quarter, the highest level since February 2021. That\u2019s up from 4.8% a month earlier, and higher than expected.<\/p>\n
In another blow, the Office for National Statistics estimate that the number of employees on payrolls fell by 32,000 in September, and by another 32,000 in October to 30.3 million.<\/p>\n
And with the jobs market cooling, wage growth slowed too. Annual growth in employees\u2019 average earnings slipped to 4.6% in the quarter, down from 4.7% in the three months to August.<\/p>\n
ONS director of economic statistics Liz McKeown says:<\/p>\n
\u201cTaken together these figures point to a weakening labour market. The number of people on payroll is falling, with revised tax data now showing falls in most of the last 12 months. Meanwhile the unemployment rate is up in the latest quarter to a post pandemic high. The number of job vacancies, however, remains broadly unchanged.<\/p>\n
\u201cWage growth in the private sector slowed further, but we continue to see stronger public sector pay growth, reflecting some pay rises being awarded earlier than they were last year.\u201d<\/p>\n
This jump in unemployment, and slowing wages, will heighten concerns that the economy is cooling \u2013 as Rachel Reeves prepares her budget due on 26 November \u2013 and could spur the Bank of England to cut interest rates again as soon as December.<\/p>\n
The agenda<\/p>\n
7am GMT: UK labour market report.<\/p>\n
8am GMT: UK grocery inflation report<\/p>\n
10am GMT: ZEW eurozone economic confidence index<\/p>\n
11am GMT: US NFIB Business Optimism Index<\/p>\n
2.30pm GMT: Business Secretary Peter Kyle makes first appearance at Business and Trade committee<\/p>\n
Share<\/a><\/p>\n Updated at\u00a002.16 EST<\/p>\n Key events<\/p>\n Show key events only<\/p>\n Please turn on JavaScript to use this feature<\/p>\n The business tax rises announced in last year\u2019s budget, and uncertainty over what the chancellor will announce this time, are being blamed for the rise in UK unemployment.<\/p>\n Isaac Stell, investment manager at tax advisory service Wealth Club, calls it a \u201cself-inflicted wound\u201d:<\/p>\n There can be no doubt that the fiscal levers pulled by the Government and the Chancellor have significantly contributed to these figures and the responsibility lies at their feet.<\/p>\n With speculation around the Budget reaching fever pitch, businesses have postponed hiring and are less likely to commit to any form of investment until they know where the economic land lies. The stakes couldn\u2019t be higher for the government and with further tax rises guaranteed at the budget, the fiscal landscape for employers and employees looks to be on ever shakier ground.\u201d<\/p>\n Ashley Webb, UK economist at Capital Economics, also blames the rise in employer national insurance contributions for workforce cuts:<\/p>\n The 32,000 fall in payroll employment in October was the eleventh monthly decline over the past year and suggests that businesses continued to trim headcounts after the Chancellor announced the rises in payroll taxes and the minimum wage in last year\u2019s October Budget.<\/p>\n Admittedly, the number of job vacancies paused its recent downward trend and remained broadly unchanged at 723,000 in the three months to Octobe<\/p>\n Share<\/a>Real wage growth slows too<\/p>\n Inflation is taking a large chunk out of UK pay growth.<\/p>\n While regular pay growth was 4.6% in July to September, that falls to just 0.8% in real terms once you adjust for CPI inflation.<\/p>\n That\u2019s down from 0.9% in the previous three-months.<\/p>\n It was last lower than 0.8% in June to August 2023, when it was 0.7%.<\/p>\n Share<\/a>Public sector pay outpaces private sector<\/p>\n Wage growth in the public sector was much more rapid than in the private sector over the summer, today\u2019s jobs report shows.<\/p>\n Annual average regular earnings growth was 6.6% for the public sector in July to September, compared with 4.2% for the private sector.<\/p>\n The ONS cautions that the public sector annual growth rate is affected by some public sector pay rises being paid earlier in 2025 than in 2024, which caused a base effect<\/a>.<\/p>\n Reminder: overall regular pay growth slowed to 4.6%, which is the lowest since February to April 2022.<\/p>\n A chart showing UK wage growth Illustration: ONSShare<\/a><\/p>\n This morning\u2019s labour market report shows a jump in unemployment among men in the last couple of months.<\/p>\n While the overall jobless rate has risen to 5% in July-September, up from 4.7% in April-June, there\u2019s a clear gender split. Among men, joblessness is up from 4.8% to 5.4%, while among women it\u2019s unchanged at 4.5%.<\/p>\n A chart showing UK unemployment rates Photograph: ONS<\/p>\n The ONS says:<\/p>\n In the latest quarter (July to September 2025), those unemployed for up to 6 months or over 12 months increased but the number of those unemployed between 6 and 12 months decreased.<\/p>\n The number of people unemployed for up to 6 months, between 6 and 12 months, and over 12 months, increased over the year, since July to September 2024.<\/p>\n The increase in the number of people unemployed in the latest quarter was the result of an increase in the number of unemployed men. We will explore this further as more data becomes available.<\/p>\n Share<\/a>Sterling drops after UK jobs report<\/p>\n The pound has dropped by half a cent against the US dollar, as traders react to the jump in UK unemployment<\/a>, and the slowdown in wage growth.<\/p>\n This has pushed sterling down to $1.3123, and indicates the City may expect the Bank of England to respond by lowering interest rates.<\/p>\n Last week, the Bank narrowly voted to leave borrowing costs unchanged, by fivevotes to four.<\/p>\n