UK unemployment rises by more than expected
By Abigail Townsend
Date: Tuesday 11 Nov 2025
(Sharecast News) - The UK labour market showed further signs of weakening on Tuesday, after the unemployment rate ticked higher.
According to the Office for National Statistics, employment softened by 0.2 percentage points in the three months to September, while the unemployment rate rose 0.3pp to 5.0%, marginally ahead of forecasts for 4.9%
The unemployment rate now stands at a post-pandemic high.
Average earnings, meanwhile, rose by 4.6%, or by 4.8% once bonuses were included.
Driving the growth was the public sector, where earnings rose by 6,6%. In the private sector, earnings increased by 4.2%.
Liz McKeown, director of economic statistics at the ONS, said: "Taken together, these figures point to a weakening labour market.
"The number of people on payroll is now falling, with revised tax data now showing falls in most of the 12 months.
"Meanwhile, the unemployment rate is up to a post-pandemic high. The number of job vacancies, however, remains broadly unchanged."
Matt Swannell, chief economic advisor to the EY Item Club, said: "Alongside cooling pay growth, labour market conditions are gradually loosening.
"In the context of December's Monetary Policy Committee meeting, the autumn Budget and the next two inflation releases are likely to be highly influential. But evidence of further cooling in pay pressures removes one potential roadblock to a pre-Christmas rate cut as well as increasing the chances of further rate cuts in 2026."
The Bank of England has cut rates just three times this year, to 4%. Economic growth remains sluggish, but the central bank has adopted a cautious approach to monetary policy in the light of persistently sticky inflation and rising wages.
It opted to leave the cost of borrowing on hold at its most recent meeting last week. But it did not rule out further cuts going forward.
Matt Britzman, senior equity analyst at Hargreaves Lansdown, said: "Labour market signals are softening across the board. Markets are now pricing in a 73% chance of a December rate cut, as the case for policy easing gains transaction."
Danni Hewson, head of financial analysis at AJ Bell, said: "There's been a lot talk about the reliability of ONS jobs data. But when you consider a host of business surveys, earnings updates from recruitment companies, payroll numbers from HMRC and concerns about a reduction in hiring from the BoE, it's hard to see anything but a clear picture of a faltering labour market."
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