Unemployment falls to 4.9% as vacancies hit five-year low

The UK unemployment rate unexpectedly fell to 4.9% for the three months to April, but the labor market showed significant signs of softening as job vacancies dropped to their lowest level in over five years. The data, released by the Office for National Statistics on Thursday, presents a mixed picture for the Bank of England as it prepares to announce its latest interest rate decision.

While the headline jobless rate declined from 5% in the prior quarter, the number of job vacancies fell by 19,000 to 707,000 in the three months to May, the lowest figure since early 2021. The decline was notable across retail, hospitality, and smaller employers, with the largest quarterly drop occurring in professional services. The number of people starting new jobs also fell to a five-year low.

Liz McKeown, the ONS director of economic statistics, said the labor market remained broadly stable but with further softening evident in some measures. She noted that payroll numbers continued to fall and that the decline in vacancies signals firms are becoming more cautious about hiring. The ONS survey indicated some businesses are putting recruitment on hold due to economic uncertainty and higher...