UK unemployment rate rises and vacancies fall again as jobs market falters

Britain’s unemployment rate has risen and vacancies have fallen for the ninth month in a row as the uncertain economic outlook begins to take its toll on the UK jobs market, official figures have shown.

The Office for National Statistics (ONS) said the unemployment rate lifted to 3.8% in the three months to February, up from 3.7% in the previous three months and the highest since the second quarter of 2022. Most economists had expected the rate to remain unchanged.

The data also revealed that vacancies fell by another 47,000 to 1.1 million in the three months to March.

But the figures also showed a rise in employment – to 75.8% in the three months to February from 75.7% in the previous three months – as more people returned to the jobs market in the face of the cost-of-living crisis.

Wage growth continues to be outstripped by soaring costs, with total pay including bonuses down by 4.1% when Consumer Prices Index (CPI) inflation is taken into account – this comes despite a 5.9% rise in earnings, according to the ONS.

Regular pay excluding bonuses also continued to rise – up by 6.6%, but down by 3.4% with CPI inflation taken into account.

Darren Morgan, director of economic statistics at the ONS, said:

“With the number of people neither working nor looking for a job down again, there were rises in both those in work and those actively looking for a job. However, while the group outside the labour market – termed ‘economically inactive’ – fell, the number among them who were long-term sick rose to a new record high. Job vacancies have fallen again but remain at very high levels. Meanwhile, pay continues to grow more slowly than prices, so earnings are still falling in real terms, although the gap between public and private sector earnings growth continues to narrow.”

The figures also showed there were 348,000 working days lost to strikes in February, up from 210,000 in January 2023, with more than three-fifths of the due to industrial action across the education sector.

The number of people off work due to long-term sickness rose to another all-time high, at 2.5 million – up 3.7% quarter-on-quarter and 7.5% year-on-year and the highest since records began in 1993.

But the overall rate of inactivity eased back to 21.1% in the quarter to February, down from 21.3% in previous three months as more young people returned to work amid the cost-of-living crisis.