The UK unemployment rate has risen to 5% in the three months to September, showing signs the labor market has weakened, according to new official figures.
It is the highest rate since the period from December 2020 to February 2021, according to the Office for National Statistics (ONS).
The rise in the unemployment rate was higher than expected, surpassing the 4.9% forecast by many analysts ahead of the November 26 Budget.
Average wage growth was 4.6% in the third quarter, up from 4.7% in the three months to August.
Liz McKeown, director of economic statistics at the ONS, said: “Taken together, these figures point to a weakening of the labor market.
“Meanwhile, the unemployment rate has risen in the last quarter to reach a post-pandemic high. However, the number of job vacancies remains virtually unchanged.”
In the three months to September 2025, the number of employees on the payroll also fell by 109,000 (0.4%) in a year.
ONS data also shows that almost 1.7 million people are claiming unemployment benefits, a slight decrease on the figure a year ago.
Responding to the latest statistics, Work and Pensions Secretary Pat McFadden said: “More than 329,000 more people have started working this year, but today’s figures are exactly why we are stepping up our plan to get Britain into work.”
Richard Carter, head of fixed interest research at Quilter Cheviot, said that with two weeks to go before the budget, “many companies will have shelved any major hiring plans.”
“Having already faced a significant rise in national insurance costs earlier in the year, they will probably be nervous about making any real commitments until they know whether the additional costs are heading their way,” he said.
Tina McKenzie, policy chair at the Federation of Small Businesses, said rising unemployment and falling numbers of people on the payroll show the government’s “complacent attitude towards jobs and businesses”.
He said small businesses were unable to hire staff due to “increasing regulation, litigation and taxes”, and called on Rachel Reeves to “take action that supports jobs and growth”.
Overall, the number of vacant positions remained unchanged, at around 723,000 between August and October 2025.
The ONS has said the unemployment rate should be treated with caution and is taking additional steps to address concerns about data quality.
