UK unemployment rate rises slightly to 5.1%

The UK unemployment rate in the three months to October has increased to 5.1%, according to official figures.

That marked a rise from 5% for the three months to September.

The number of people in the UK who are unemployed is now at its highest level since January 2021, just below the peak rate seen during the Covid-19 pandemic.

The Office for National Statistics (ONS) said the data reflected a “subdued labour market”.

Average wage growth was 4.6%, excluding bonuses, between August and October 2025.

Annual average earnings growth in private companies slowed from 4.2% to 3.9% but accelerated for the public sector employees from 6.6% to 7.6%, compared with the prior three-month period.

Wage growth adjusted for inflation was 0.5%, excluding bonuses.

Estimates for employees on company payrolls dropped by 149,000, or 0.5%, in October compared with the previous year.

Liz McKeown, the ONS director of economic statistics, said the figures indicate “a weakening labour market”.

“The number of employees on payroll has fallen again, reflecting subdued hiring activity.

“The fall in payroll numbers and increase in unemployment has been seen particularly among some younger age groups,” Ms McKeown said.

James Reed, the chief executive of Reed Recruitment said all the main measures of the labour market were “going in the wrong direction”.

“I’m wondering whether they’ve hit the bottom or not,” he said.

Mr Reed told the BBC’s Today programme the increase to the minimum wage announced in the Budget was “very welcome for people who have jobs” but “the economics of hiring at entry level is becoming less and less appealing to employers”.

The government has pledged to scrap the two-tier minimum wage and create a new rate for all adults.

But many businesses have said this will make them less inclined to hire young workers with little or no experience.

Meerah Nakaayi is 22 and from London. She did a two-year apprenticeship in policy and then worked in the sector for two years, but has been out of work since June.

Meerah said: “The last six months have been incredibly frustrating and demotivating.

“My last interview feedback stated how they had 290 applications for a policy analyst role … for a niche policy area. I think that just shows how competitive it really is out there.”

Yael Selfin, chief economist at KPMG UK, said: “The prospects for a rebound in hiring activity for younger workers remain weak.

The falling rate of private-sector wage growth reflects “a marked slowdown in hiring activity amongst businesses,” she said.

Ms Selfin also said that the overall picture bolstered the case for the Bank of England to cut its base interest rate this week.

Responding to the ONS figures, Secretary of State for Work and Pensions Pat McFadden said the data “underline the scale of the challenge we’ve inherited”.

“That is why we are investing £1.5bn to deliver 50,000 apprenticeships and 350,000 new workplace opportunities for young people – giving them real experience and a foot in the door.

“To go further and tackle the deep-rooted issues of our labour market, Alan Milburn is also leading an investigation into the whole issue of young people inactivity and work.”

Helen Whately, shadow work and pensions secretary, accused the government of implementing “growth-killing policies” that would lead to job losses in the run up to Christmas.

“Fourteen months in a row of higher unemployment means thousands of families will be struggling through the holiday season and without a steady income heading into the New Year.”