Jobless rate unexpectedly rises as economic uncertainty takes its toll

The UK’s unemployment rate has risen again unexpectedly while vacancies have fallen to the lowest level for 18 months as economic uncertainty weighs on the jobs market, according to official figures.

The rate of unemployment rose to 3.9% in the three months to March, up from 3.8% in the previous quarter and the highest level since the three months to January 2022, the Office for National Statistics (ONS) said.

Most economists had expected the rate to remain unchanged at 3.8%.

The number of vacancies fell by 55,000 quarter on quarter to 1.08 million in the three months to April, marking the 10th fall in a row.

The ONS said this reflects “uncertainty across industries, as survey respondents continue to cite economic pressures as a factor in holding back on recruitment”.

But the figures also showed a rise in the employment rate to 75.9% and a fall in inactivity as more men in particular starting looking for work.

In another sign of a flagging jobs market, the more timely PAYE figures showed the first fall in workers on payrolls since February 2021, down 136,000 to 29.8 million.

Darren Morgan, director of economic statistics at the ONS, said: “Employment and unemployment both rose again in the first three months of 2023, driven in particular by men.

“This means the number of those neither working nor looking for work continues to fall, although the number of people not working due to long-term sickness rose again, to a new record.

“However, the number of people on employers’ payrolls fell in April for the first time in over two years, though this is an early estimate that could be revised later.

“Despite continued growth in pay, people’s average earnings are still being outstripped by rising prices.”