Market steadying after sharp rise in job losses - ONS

Britain's employment market has shown signs of stabilising after a sharp rise in job losses earlier this year blamed on tax rises introduced by Rachel Reeves.

- Richard Partington

As the chancellor prepares for her 26 November budget, figures from the Office for National Statistics (ONS) showed the unemployment rate rose to 4.8% in the three months to August, up from 4.7% in July. City economists had forecast that the rate would remain unchanged.

Separate figures from HMRC showed the number of workers on company payrolls dropped by 10,000 in September. However, the ONS said the slowdown in the jobs market was steadying after steeper declines earlier this year, which had been attributed to tax increases announced by Reeves in 2024 and introduced in April.

"After a long period of weak hiring activity, there are signs that the falls we have seen in both payroll numbers and vacancies are now levelling off," said Liz McKeown, the ONS director of economic statistics.

Highlighting a continued slowdown, single-month figures for August showed unemployment rose to 5.3%, the highest rate since October 2020. However, economists cautioned the reading was likely to be volatile and prone to revision.

The ONS's figures are based on its widely criticised labour force survey, which has suffered from collapsing response rates. Experts have argued this leaves policymakers "flying blind", risking decisions being taken based on flawed data.