UK unemployment rate ticks higher

16th Dec 2025 07:00

(Sharecast News) - The UK unemployment rate ticked higher in October, official data showed on Tuesday, in line with expectations, while wage growth slowed.

According to the Office for National Statistics, the estimated UK unemployment rate rose 0.4 percentage points to 5.1%.

The inactivity rate dipped 0.1 percentage points to 21%.

Wages also continued to grow. Including bonuses, total earnings rose 4.7%, while regular earnings - which exclude bonuses - rose 4.6%.

However, while both were above consensus - for growth of 4.4% and 4.5% - they were down on September's upwardly-revised growth of 4.9% and 4.7% respectively.

The biggest hike in wages was seen in the public sector, where average regular earnings growth was 7.6%, compared to 3.9% in the private sector.

Liz McKeown, director of economic statistics at the ONS, said: "The overall picture continues to be 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."

Estimates for payrolled employees fell by 149,000 year-on-year, and by 22,000 between September and October.

In August to October - the period comparable with the ONS's Labour Force Survey - the number of payrolled staff fell by 113,000 over the year. Vacancies remained broadly flat.

McKeown added: "The fall in payroll numbers and increase in unemployment has been seen particularly among some younger age groups."

The Bank of England meets for the final time this year on Thursday, and is now widely expected to cut the cost of borrowing.

James Smith, developed markets economist, UK, at ING, said: "Ask any Bank of England official and they'll tell you that sticky wage growth has been one of the central reasons it's been cautious about cutting rates over the past couple of years. But that is changing - and rapidly.

"Having started the year close to 6%, private sector pay is now rising by just 3.9%. In fact, wages are rising by just 3% in three-month annualised growth terms, which gives a clear sense of just how much momentum has slowed through the summer."

ING, which believes a rate cut on Thursday is "highly likely", is currently forecasting two further reductions in the first half of 2026.

Neil Wilson, UK investor strategist at Saxo Markets, said: "The UK jobs market continues to look less sure-footed by the month.

"Cooler wage growth makes the case for a swift responses from the BoE stronger. A rate cut is assured this week, but persistently weak labour market data like we are seeing should portend further cuts next year."