Unemployment back up as UK job vacancies fall

Unemployment crept back up despite a fall in last month's data as it was shown that the UK jobs market weakened in the last quarter. The Office for National Statistics said the UK unemployment rate was five per cent in the three months to March 2026. The unemployment rate had dropped to 4.9 per cent in last month's release. Vacancies also declined further to a five-year low, uncovering the difficulties faced by job seekers in a weakened market. The number of payrolled employees fell by 20,000 over the quarter and an early estimate for the three months to April suggest there could be a fall of 100,000 over three months. Bank of England officials may have taken greater notice of new wage growth figures that could concerns some policymakers. Including bonuses, wage growth was higher than expected at 4.1 per cent. Pay growth over the three months to march was 3.4 per cent per cent when bonuses were stripped from the figure, matching predictions set by economists. "Latest figures suggest the labour market remains soft, with vacancies at their lowest level in five years and unemployment higher than a year ago," said Liz McKeown, director of economic statistics. The latest set of job numbers provide some further context on the state of the British economy after the first quarter of the calendar year. GDP figures provided Rachel Reeves with a boost as the ONS estimated that the economy grew by 0.6 per cent in the first three months of the year. Forecasts for the jobs market have been mixed, with economists at the Office for Budget Responsibility and the Bank of England pencilling in a peak unemployment rate of around 5.3 per cent. Some City analysts have warned that joblessness could rise higher. Job market crunch Monetary Policy Committee members, who set interest rates every six weeks, will be closely eyeing any signs of pay pressures. This focus on wages comes as economists fear that the rise in inflation from the Iran war could push up salaries, leading to a spiralling effect in price pressures. The International Monetary Fund said the Bank would not have to raise interest rates this year despite predictions of a hike by a number of City firms. The IMF warned that interest rates heavily depended on whether data kept in line with expectations. Both economists at the Bank and across private sector companies will now be looking out for government reforms expected on welfare. The first batch of research from the Alan Milburn review into young people not in education, employment or training (Neets) is expected to be published in days, setting out possible job market reforms to be introduced by any Labour leader.