UK unemployment rate rises to 5.1% in latest ONS data – latest

Jane Gratton, Deputy Director of Public Policy at the British Chambers of Commerce said the latest data paints a “gloomy picture” that reflects the uncertainty businesses have around hiring.

“The latest data paints a gloomy picture for jobs, opportunities and growth,” she said.

“It reflects what businesses tell us – 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.

“While there has been some easing of cost pressures – with average earnings including bonuses slowing to 4.7 per cent in the three months to October – labour costs remain a challenge. Nearly three quarters (72 per cent) of businesses in our latest survey said labour costs are the biggest cost pressure they are facing.

“There is a limit to how much additional cost firms can absorb without an impact on investment and growth. The further increase in unemployment, hitting 5.1 per cent in October, is also a clear sign of the sluggish economy.

“We need a laser like focus on stimulating growth and boosting investment, trade, innovation and skills. The government must work in partnership with business to make 2026 a year of delivery.”

We’re getting more reaction in to today’s fresh unemployment figures.

TUC (Trades Union Congress) general secretary Paul Nowak said the government must now prioritise helping those who are not in work.

“When the economy starts to recover, the jobs market will follow – and it is welcome that vacancies now look to have stabilised. But with unemployment rising and real wage growth slowing, the priority must be boosting demand,” he said.

“This week, the Bank of England needs to support the economy with a further interest rate cut – making it easier for firms to invest and households to spend.

“And with the effects of the recent economic slowdown continuing to feed into the labour market, it is vital that those who are out of work get the help they need.

“Experience of real work is best way to help young people who are starting out, and the new youth guarantee can be a major step forward for improving young people’s prospects.

“Let’s be clear – good quality jobs are the foundation of a strong economy, and go hand in hand with high productivity growth. That’s why the Employment Rights Bill is so important.”

The Independent’s political correspondent Millie Cooke reports:

The government is “absolutely focused on getting more jobs, getting better paid jobs” into the UK economy, a minister has insisted after new figures showed that the rate of UK unemployment has risen to 5.1 per cent in the three months to October.

Asked whether he accepts that unemployment has risen under Labour, Stephen Kinnock told Sky News: “We’ve also created hundreds of thousands of new jobs in our country. We’ve had the highest growth rate.”

But pressed again on whether he accepts that unemployment has risen, he said: “Well, the way to create more jobs is to create growth, and that is what this government is completely focused on, with billions of pounds of additional investment.”

He added: “We’re absolutely focused on getting more jobs, getting better paid jobs. We’ve also seen the minimum wage increasing substantially, so we’re dealing with that cost of living side. We, of course, want more jobs in our economy, but we want them to be well paid job where people are really able to move on in life and get up that ladder. That is what this Labour government is about.”

Young people are particularly badly impacted by the faltering labour market, new figures from the ONS show.

Unemployment jumped by 47,000 for those aged between 25 and 34, while it was 28,000 higher for those aged 16 and 17.

Across the market, vacancies fell slightly, down 2,000 to 729,000 between September and November.

Ben Harrison, director of the Work Foundation at Lancaster University, a leading think tank for improving working lives in the UK, said there are now 546,000 young people aged 18-24 who are unemployed – the highest since 2015 and up by 85,000 on quarter.

“Most worryingly it appears it is getting harder for these workers to access work,” he said. “Long-term unemployment has risen by 93,000 on the year, with the challenge of finding work exacerbated by an increasingly competitive jobs market as vacancies are down on the year by 78,000.

“On the day that the government has announced the Milburn Review into youth unemployment, these figures also lay bare the tough jobs market facing young people, and indicate policymakers must pick up the pace on boosting the number of secure, well-paid jobs through its Industrial Strategy and in rolling out additional tailored employment support to help people back into work quickly.”

The UK’s attractiveness as a destination for entrepreneurs and investment has been badly hit by Rachel Reeves’ Budget, according to a respected international index.

The latest annual Nomad Capitalist Passport Index has suggested that tax hikes have added obstacles to employ people and the abolition of non-dom status in the UK has harmed the country’s reputation abroad.

The index has revealed that the UK dropped 14 places from its position in 2024 of 21st to 35th.

The Independent’s political editor David Maddox has more below:

Analysis from The Independent’s business and money editor Karl Matchett:

UK unemployment has been steadily climbing since the middle of last year – it was just 4.1 per cent in summer 2024 – but the growth rate of unemployment has also been rising faster of late.

Outside of Covid, where unemployment briefly hit 5.3 per cent, the last time it was at this level was back in the first three months of 2016, very nearly a decade ago.

As well as rising unemployment, today’s data shows wage growth continuing to slow – though at 4.6 per cent it’s still above the rate of inflation.

Beyond the obvious concern of fewer people working, the immediate knock-on effect of this data is likely to be another firm check in the box for an interest rates cut on Thursday.

The Conservatives blamed Labour’s “growth-killing policies” for rising unemployment figures.

Shadow work and pensions secretary Helen Whately said: “Losing your job is hard at the best of times, but in the run up to Christmas it’s particularly cruel.

“But thanks to Labour’s growth-killing policies, that’s the sad reality for many people this Christmas.”

She pointed to the hike on employer national insurance contributions and the measures included in the Employment Rights Bill.

Shadow business secretary Andrew Griffith said Labour were “pursuing a suite of anti-business policies that is sending employers to the wall”.

The work and pensions secretary said figures showing the unemployment rate at its highest level for nearly five years reflect the “scale of the challenge” Labour inherited.

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.

“That is why we are investing £1.5 billion to deliver 50,000 apprenticeships and 350,000 new workplace opportunities for young people – giving them real experience and a foot in the door.

“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.”

The ONS chief has said the latest unemployment figures are evidence of a “weakening” labour market.

Following the release of its latest figures on Tuesday morning, ONS director of economic statistics Liz McKeown said: “The overall picture continues to be of a weakening labour market.

“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.

“This weakness is also reflected in an increase in the unemployment rate while vacancies remained broadly flat.

“The fall in payroll numbers and increase in unemployment has been seen particularly among some younger age groups.”

UK average regular earnings growth fell to 4.6 per cent in the three months to October and was 0.9 per cent higher after taking Consumer Prices Index inflation into account, the Office for National Statistics has said.