UK unemployment rises to 5%, the highest level in four years

"Unemployment in the UK has risen by more than expected to the highest level in four years, official figures show, amid a worsening slowdown in the jobs market before Rachel Reeves's autumn budget. With under three weeks to go before the chancellor's tax and spending statement, figures from the Office for National Statistics (ONS) show the headline unemployment rate rose to 5.0% in the three months to the end of September, up from 4.8% in the previous quarter. City economists had forecast an increase to 4.9%."

"The ONS's figures are based on its widely criticised labour force survey, which has suffered from collapsing response rates. Experts have argued this leaves policymakers flying blind, risking decisions being taken based on flawed data. However, separate data suggests the jobs market has slowed sharply, as employers come under pressure from tax increase, stubborn inflation, elevated borrowing costs and a sluggish growth outlook. Figures from HMRC published on Tuesday showed the number of workers on company payrolls fell by 32,000 in October, compared with September."

UK unemployment rose to 5.0% in the three months to the end of September, up from 4.8% in the prior quarter and above City economists' 4.9% forecast. The rate was last higher in early 2021. The ONS described the data as pointing to a weakening labour market. The ONS labour force survey has suffered collapsing response rates, raising concerns that policymakers may be relying on flawed data. HMRC payroll figures showed 32,000 fewer workers in October. Employers face pressure from tax increases, stubborn inflation, elevated borrowing costs and sluggish growth, while the chancellor is expected to raise taxes to plug up to £30bn.

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