Britain’s unemployment rate has unexpectedly increased as vacancies dropped to their lowest level in five years, driven by a sharp reduction in hiring across the struggling retail and hospitality sectors, according to official figures.
Jobless rate rises to 5%
The Office for National Statistics (ONS) reported that the jobless rate rose to 5% in the three months to March, up from 4.9% in the three months to February. Most economists had anticipated the rate would remain unchanged.
The ONS also estimated that the number of workers on UK payrolls fell by 100,000 during April, marking the largest decline since May 2020 at the onset of the Covid-19 pandemic, though these figures are subject to revision.
Vacancies slump to five-year low
Vacancies decreased by 28,000 quarter-on-quarter to 705,000 in the three months to April, the lowest level since the same period in 2021. The drop was particularly noticeable in lower-paying sectors.
Regular earnings growth also slowed further, to 3.4% in the first quarter, down from 3.6% in the three months to February. This is only 0.3 percentage points above the Consumer Prices Index inflation rate.
Labour market remains soft
Liz McKeown, ONS director of economic statistics, commented: “Latest figures suggest the labour market remains soft, with vacancies at their lowest level in five years and unemployment higher than a year ago.”
She added: “Lower-paying sectors such as hospitality and retail have seen some of the largest falls in vacancies and payroll numbers, both in recent months and over the last year.”
