UK unemployment rate rises to 5% as vacancies fall and payrolled jobs drop

The UK unemployment rate has risen unexpectedly to 5% for the three months to March, up from 4.9% in the previous quarter, according to the Office for National Statistics. The increase coincides with job vacancies falling to their lowest level in five years and a sharp drop in the number of payrolled employees.

Official data shows the number of vacancies dropped by 28,000 to 705,000 in the three months to April. An early estimate indicates the number of workers on payrolls fell by 100,000 in April alone, which officials noted is the largest single-month decline since May 2020, though these initial figures are subject to revision. Liz McKeown, ONS director of economic statistics, said the latest numbers suggest the labour market remains soft, with unemployment higher than a year ago. She stated that lower-paying sectors such as hospitality and retail have seen some of the largest falls in vacancies and payroll numbers.

Average regular earnings growth, excluding bonuses, slowed to 3.4% in the first quarter, down from 3.6%. After accounting for inflation, real wage growth was just 0.3%. Wage growth including bonuses was higher, at 4.1%.

Economists and business groups linked the...