UK unemployment at highest point in over two

Official figures reveal that the UK unemployment rate has unexpectedly risen to its highest point in two and a half years. The rate increased to 4.4% in the three months to April, marking the highest level since September 2021.

Despite this rise, wage growth remained robust, with earnings continuing to outpace inflation. The inactivity rate also climbed, reaching its highest level in nearly a decade, with over a fifth of working-age individuals not actively seeking employment.

"The latest figures suggest that the labour market might be cooling, with vacancies declining and unemployment rising, although earnings growth remains relatively strong," the Office for National Statistics (ONS) commented.

Regular earnings, excluding bonuses, grew at an annual rate of 6%, unchanged from the previous month. Adjusted for inflation, pay increased at an annual rate of 2.9%, the highest since August 2021.

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

The ONS urged caution regarding the unemployment figures due to a small survey sample, but these numbers were supported by more recent data on employers’ payrolls, showing a decline of 36,000 employees between March and April, with further decreases in May.

Job vacancies also fell by 9,000 to 904,000. The ONS data indicated that 22.3% of working-age adults in the UK are not actively looking for work, which translates to over nine million people.

Concerns have been raised about worker shortages affecting the UK economy, with the inactivity rate remaining high since its surge during the pandemic. The current rate is the highest since 2015, with long-term sickness being a significant factor. Since 2022, long-term sickness has become the primary reason for economic inactivity among working-age individuals.

A Plaid Cymru spokesperson highlighted that Wales had the highest economic inactivity rate and the lowest employment rate, calling it "a damning indictment both on the Conservatives at Westminster and Labour in Wales."