The UK’s unemployment rate has risen, official figures suggest, while pay growth continues to slow.
The rate of unemployment stood at 4.3% in the three months to September, up from 4% the previous quarter.
However, the Office for National Statistics (ONS) urged caution over giving too much weight to its latest jobs figures due to issues with how it gathers the data.
While wage growth has eased, pay is still rising faster than inflation, which measures the rate of price increases.
Excluding bonuses, pay grew at an annual rate of 4.8% between July and September – the lowest in more than two years.
The number of vacancies also fell again, as they have been doing for more than two years now.
Liz McKeown, director of economic statistics at the ONS, pointed out that the total still remains a little above pre-pandemic levels.
She told the BBC’s Today programme that the latest figures suggested there was a “continued easing of the labour market”.
The ONS’s Labour Force Survey, which produces the data on jobs in the UK, has had a smaller number of respondents over the past year than normal, prompting concerns over its reliability.
The Bank of England closely watches the jobs data when making decisions on interest rates. It cut rates for the second time this year last week, with inflation below its 2% target at 1.7%.
But the latest ONS figures are supported by anecdotal reports that some businesses, already facing higher costs, paused hiring ahead of the Budget.
Some supermarkets, including Asda and Sainsbury’s and High Street giant Marks and Spencer have said they face a steep rise in costs as a result of the hike in National Insurance contributions (NICs) and increases to the minimum wage from April under measures outlined in Chancellor Rachel Reeves’ first Budget.
The tax rises have led to concerns from businesses that they might have to cut back on hiring, restrict wage increases for staff, and raise prices.
While public sector pay awards granted by the government will feed through to official figures over the rest of the year, economists have warned the forthcoming rise in employers’ NICs could squeeze those in the private sector.
Rob Wood, chief UK economist at Pantheon Macroeconomics, said that the Bank of England would focus on big trends rather than “small data misses” by the ONS.
“Unemployment is likely gradually rising, the labour market is loosening but it remains tight,” he said. “Similarly, wage growth is gradually slowing but remains too high still to deliver inflation sustainably at target.”
Other economists have said they do not believe the latest figures from the ONS would spur the Bank to opt for another rate cut in December.
Work and Pensions Secretary Liz Kendall said that “more needs to be done to improve living standards”.
The Labour MP said that from April, three million of the lowest-paid workers would benefit from an increase to the minimum wage, known officially as the National Living Wage.
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