The UK’s unemployment rate has unexpectedly risen to its highest level in two and a half years, according to official figures released by the Office for National Statistics (ONS).

The rate increased to 4.4 percent from February to April this year, up from the previous figure of 4.3 percent, marking the highest level since September 2021.

In addition to the rise in unemployment, the ONS noted an increase in the inactivity rate, with 22.3 percent of working-age individuals not actively seeking employment. Despite these shifts, wage growth has remained robust, with regular pay rising at an annual rate of 6 percent.

Earnings have continued to outpace inflation, the rate at which prices rise. When adjusted for inflation, regular pay saw an annual increase of 2.9 percent, the highest since August 2021.

“This month’s figures continue to show signs that the labour market may be cooling, with the number of vacancies still falling and unemployment rising, though earnings growth remains relatively strong,” the ONS stated.

Economists anticipated a rise in pay due to the increase in the National Living Wage in April. For those aged 21 and over, it rose to £11.44 an hour, a 9.8 percent increase from the previous year.

While the ONS has advised caution due to the small sample size of its survey, the findings are corroborated by more recent employer payroll data. This data indicates a drop of 36,000 employees between March and April, with a continued decline in May. Additionally, the number of job vacancies fell by 9,000 to 904,000.

A line graphic illustrating the UK’s unemployment rate since early 2019 shows a recent increase, reaching the current rate of 4.4 percent. This data will be closely examined by the Bank of England as it considers the timing of its first interest rate cut since the pandemic began.

The Bank of England is scheduled to meet next week to discuss interest rates. However, KPMG’s chief economist, Yael Selfin, suggested that the “mixed” data is “unlikely to shift the dial at the Bank of England,” predicting that rates will remain unchanged this month. She attributed weaker demand for staff to a “lack of roles and firms delaying hiring decisions.”

What is the trajectory of the unemployment rate?

Abrdn’s deputy chief economist, Luke Bartholomew, commented: “UK wage growth remains very strong, but with further evidence that the labour market is cooling, this report is unlikely to significantly change the thinking at the Bank of England. We expect the first rate cut in August, but that is dependent on further progress on bringing down underlying inflation pressure over the next few months.”

Tom Cornell, Senior I/O Psychologist at HireVue says that the “current job market is paradoxical: more people are unemployed, job vacancies are still abundant, and yet there seems to be a shortage of suitable talent. This is because there is a significant flaw in the current hiring processes, and the solution lies in broadening the talent pool to identify more suitable candidates with better-suited skills. Our overattachment to the outdated CV, which is a mere indicator of employment history and not of skills or abilities, could be at the heart of these rising unemployment rates.





Amelia Brand is the Editor for HRreview, and host of the HR in Review podcast series. With a Master’s degree in Legal and Political Theory, her particular interests within HR include employment law, DE&I, and wellbeing within the workplace. Prior to working with HRreview, Amelia was Sub-Editor of a magazine, and Editor of the Environmental Justice Project at University College London, writing and overseeing articles into UCL’s weekly newsletter. Her previous academic work has focused on philosophy, politics and law, with a special focus on how artificial intelligence will feature in the future.