UK unemployment up as wage growth continues to be outstripped by soaring costs

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.

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.

The ONS said this reflects “uncertainty across industries, as survey respondents continue to cite economic pressures as a factor in holding back on recruitment”.

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 inflation is taken into account – this comes despite a 5.9% rise in earnings, according to the ONS.

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.”

Chancellor Jeremy Hunt said: “While unemployment remains close to historic lows, rising prices continue to eat into pay cheques which is why halving inflation this year is one of our top economic priorities.

“To help families in the meantime, we are making work pay with a record increase in the National Living Wage, while providing cost of living support worth an average of £3,300 per household this year and last, funded through windfall taxes on energy profits.”