UK Unemployment Hits 5.1% in October, Highest Level Since January

The UK unemployment rate has risen to 5.1% in the three months to October, according to official figures released by the Office for National Statistics (ONS). This marks a slight increase from the 5% recorded in the three months to September, and represents the highest level of unemployment since January 2021. The data reflects a "subdued labour market", with average wage growth standing at 4.6% excluding bonuses, between August and October 2025. Annual average earnings growth in private companies slowed from 4.2% to 3.9%, while accelerating for 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. This decline in payroll numbers and increase in unemployment have been seen as a weakening labour market, according to Liz McKeown, the ONS director of economic statistics. "The number of employees on payroll has fallen again, reflecting subdued hiring activity," McKeown said. "This is a concerning trend, as it suggests that businesses are becoming more cautious in their hiring decisions, which could have a ripple effect on the wider economy." The rise in unemployment and decline in payroll numbers have significant implications for the UK economy. A weakening labour market can lead to reduced consumer spending, lower economic growth, and increased pressure on businesses to cut costs. This, in turn, can lead to reduced investment, lower profits, and decreased economic activity. The impact of the rising unemployment rate is also being felt in the financial markets. The pound sterling has fallen against the US dollar, while UK government bond yields have risen. This is a reflection of investors' concerns about the UK's economic prospects and the potential for a slowdown in growth. In the context of the UK's economic history, the current unemployment rate is not as high as it was during the 2008 financial crisis, when it peaked at 8.5%. However, the current rate is still higher than the pre-pandemic level of 3.9% in 2019. Looking ahead, the ONS has forecast that the unemployment rate is likely to continue to rise in the coming months, driven by a weakening labour market. This could lead to increased pressure on policymakers to implement measures to support businesses and workers, such as tax cuts or increased government spending. In conclusion, the rise in UK unemployment to 5.1% is a concerning trend that reflects a weakening labour market. The implications for the UK economy are significant, and policymakers will need to carefully consider their response to mitigate the effects of this trend.