Britain's labour market has shown further signs of cooling, with the official unemployment rate climbing to its highest level in nearly four years.
Key Figures Reveal Labour Market Slowdown
The Office for National Statistics (ONS) reported that the UK unemployment rate increased to 5.1% for the three-month period covering August to October 2025. This marks a rise from 5% in the previous month and represents the highest level recorded since the quarter ending in January 2021.
The data reveals a sustained decline in employment, with the number of workers on company payrolls falling by 149,000 between October 2024 and October 2025. A significant portion of this drop occurred recently, with payrolls shrinking by 22,000 in October alone.
Wage Growth Cools Amidst Hiring Weakness
Accompanying the rise in joblessness, the pace of wage growth has also moderated. Average earnings, excluding bonuses, grew by 4.6% in the latest quarter, down slightly from 4.7% a month earlier. When bonuses are included, total pay growth slowed more noticeably to 4.7% from 4.9%.
This deceleration in pay pressures is a critical factor for the Bank of England's Monetary Policy Committee, which meets this Thursday to decide on interest rates. The weakening data could encourage a move towards a rate cut to stimulate the economy.
Official Analysis Points to Broad Weakness
Liz McKeown, Director of Economic Statistics at the ONS, stated that the figures paint a clear picture of a softening jobs market. "The overall picture continues to be of a weakening labour market," McKeown said. "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."
She highlighted that the increase in the unemployment rate was particularly evident among younger age groups. The ONS also noted that job vacancies remained broadly flat, failing to show signs of growth that could absorb those seeking work.
The focus now shifts to the delayed US non-farm payroll report, due later today, which will provide a crucial transatlantic comparison on the health of the global economy.
