Unemployment rates at highest level for nearly a year as job vacancies plummet

It marked the second time in a row that the decline in earnings growth has failed to match forecasts

The UK has suffered its highest level of unemployment rates for nearly a year, as the number of jobs available also plummeted, according to new figures.

The number of people not in work rose to 4.3% in the three months to March, which is the highest number since May to July last year and up from 4.2% in the previous three months, according to the Office of National Statistics.

The number of job vacancies also declined for a 22nd consecutive month, meaning more unemployed people are competing for the same job.

But pay rises remained at 6%. It had been expected to slow to 5.9% between January and March. Although this will be beneficial to many people, it is unhelpful for the Bank of England in its battle to rein in inflation.

ITV News Business and Economics Editor Joel Hills tweeted: "GDP isn’t everything. "If we want to improve pay and living standards we need to find a way of raising productivity."Sadly, the latest Office for National Statistics data shows output per hour worked is heading in the wrong direction. "Output per worker is only 0.8% higher than a year ago."

With signs of less job positions and growing competition for employment, the HM Revenue and Customs estimated the number of UK workers on payrolls fell by a significant 85,000 to 30.2 million in April. This is the largest decline since May 2020. ONS said this was subject to revision.

It added the number of people classed as 'economically inactive' - defined as those aged between 16 to 64 years old not in work or looking for a job - rose to 9.4 million in the first three months of 2024 – up 1.1% quarter-on-quarter and 3.3% higher than a year earlier.

Liz McKeown, ONS director of economic statistics, said: "We continue to see tentative signs that the jobs market is cooling.

"At the same time the steady decline in the number of job vacancies has continued for a 22nd consecutive month, although numbers remain above pre-pandemic levels.”

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Chancellor Jeremy Hunt said: “This is the 10th month in a row that wages have risen faster than inflation, which will help with the cost-of-living pressures on families.

"While we are dealing with some challenges in our labour supply, including pandemic impacts, as our reforms on childcare, pensions tax reform and welfare come online I am confident we will start to increase the number of people in work.”

Rob Wood, of Pantheon Macroeconomics, added he believed a rate cut in June was still “on track” despite the strong wages growth.

“That said, strong wage growth will likely stop the Monetary Policy Committee cutting bank rates quickly,” he said.

Economists remain cautious over the ONS data, as the statistics body continues to overhaul its labour force survey due to low response rates, with the full revamped version not due to be introduced until September.

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