The United Kingdom’s unemployment rate has jumped to 5% for the quarter ending September. This figure represents the largest share since the four months between December 2020 and February 2021. Analysts had originally estimated it would be 4.9%. The increase was larger than expected and highlighted the continued strain on the nation’s labor market.
The Office for National Statistics (ONS) was forced to publish these official figures, confirming a deeply worrying signal that the hidden UK economy is at breaking point. While unemployment is increasing, job vacancies are flat. The widespread effects of their immediate suspension have contributed to keeping them low, stalling at about 723,000 from August through October 2025. This stagnation rather indicates that employers might not be willing to bring on new hires with large scale uncertainties continuing to cloud the economic landscape.
Unemployment numbers are currently increasing sharply. The UK experienced a loss of 109,000 payrolled employees, an annual decline of -0.4%. Average wage growth is at 4.6% in the third quarter. That’s a step back from the 4.7% growth reported in the three-month period ending in August. These numbers represent the first signs of a labor market that may be starting to weaken, raising alarms over the prospect of future jobless claims.
Liz McKeown, director of economic statistics for the ONS, said on today’s data.
“Taken together, these figures point to a weakening labour market. Meanwhile the unemployment rate is up in the latest quarter to a post pandemic high. The number of job vacancies, however, remains broadly unchanged.” – Liz McKeown
According to the latest employment figures, there’s still some good news to be found, in spite of all these alarming trends. And as Pat McFadden observed, more than 329,000 additional people have entered into work this year alone.
“Over 329,000 more people have moved into work this year already, but today’s figures are exactly why we’re stepping up our plan to get Britain working.” – Pat McFadden
Yet even with this dramatic rise in employment, the large story remains a labor market that is still stretched thin. The juxtaposition of rising unemployment against stable job vacancies raises questions about employer confidence and economic growth prospects.
The spike in the unemployment rate is a microcosm of a larger economic challenge where businesses are experiencing disruption on multiple fronts. More people than ever are succeeding in entering the workforce today. Millions more are just one paycheck away from lost work, an unfortunate reminder of the inequities in our labor market.