Young people bearing the brunt as jobless rate hits 5.1% ahead of Budget
The Office for National Statistics said there had been an 85,000 increase in those unemployed aged between 18 to 24 in the three months to October.
Britain’s jobs market showed further signs of weakening in the lead up to last month’s Budget as official figures revealed the unemployment rate lifting to its highest level since early 2021 and young people among the hardest hit.
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 at the height of the pandemic, but outside the Covid era, 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.
Economists said uncertainty ahead of the November 26 Budget weighed on the jobs market, less than a week after an unexpected 0.1% contraction in the economy in October was blamed on worries over what measures the Chancellor would announce.
Rob Wood, chief UK economist at Pantheon Macroeconomics, said: “Budget chaos has hit job growth in the past few months as firms seem to have delayed decision-making.”
Sanjay Raja, chief UK economist at Deutsche Bank Research, said: “Worrying signs in the labour market continue as we head towards Christmas.
“Peak Budget uncertainty has seemingly impacted hiring plans.”
But experts said the easing back in pay growth would help reinforce the case for the Bank of England to cut interest rates to 3.75% from 4% when it decides on Thursday, as it helps ease policymaker fears over long-term inflation pressures.
The latest ONS figures provisionally 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 young people 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.
Unemployment jumped by 47,000 for those aged between 25 and 34, while it was 28,000 higher for those aged 16 and 17.
The number of young people not in employment, education or training – so-called Neets – has been rising since 2021, and the current level is the highest since 2014.
Work and Pensions Secretary Pat McFadden said: “There 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’s figures underline the scale of the challenge we’ve inherited.”
“To go further and tackle the deep-rooted issues of our labour market, Alan Milburn is also leading an investigation into the whole issue of young people inactivity and work,” he said.
The data also showed that vacancies fell slightly, down 2,000 to 729,000 between September and November, while the number of people made redundant also increased, up nearly 50% to 156,000.
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.”
Wednesday’s inflation figures are also seen as being key to the Bank’s decision, with economists expecting a drop to 3.5% last month from 3.6% in October.
