Unemployment has risen to 4.5%, the highest level since summer 2021. The figure covers the first quarter of 2025 and marks a 0.2 percentage point increase from the previous quarter.
The rise in joblessness is based on data from the Office for National Statistics’ (ONS) Labour Force Survey, which has faced heavy criticism due to declining response rates. However, the ONS said recent updates show “clear improvement” in data quality.
Alongside the higher unemployment rate, job vacancies have also dropped. There were 761,000 vacancies in the three months to April, down 5.3% on the previous quarter and 131,000 fewer than a year earlier. The construction industry saw the most significant fall in openings.
Regular pay growth slowed slightly to 5.6% in the three months to March, compared with 5.9%. While still high by historical standards, the slower growth may reassure the Bank of England’s monetary policy committee, which reduced interest rates to 4.25% last week.
The number of payroll employees also dipped by 47,000 between February and March. The overall employment rate was steady at 75%, while economic inactivity increased to 21.4%, still above pre-pandemic levels.
The Bank of England is watching closely as firms adapt to a £25bn rise in employer national insurance contributions and a 6.7% increase in the national living wage. Meanwhile, the ONS is undergoing an independent review into the reliability of its data.
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