Zarah ChoudharyThe UK unemployment rate for people aged 16 years and over was estimated at 4.3% in the period from July to September 2024, according to a report released today by the Office for National Statistics (ONS).
This figure was higher than estimates from a year ago and showed an increase over the latest quarter.
Payrolled employees fell by 5,000 in October 2024 on the month but increased by 95,000 (0.3%) over the year, reaching 30.4 million.
The employment rate in the UK remained largely stable at 74.8%, while the economic inactivity rate decreased to 21.8%.
Additional data showed that annual growth in average regular earnings excluding bonuses in Great Britain was 4.8% from July to September 2024, while annual growth in total earnings, including bonuses, was 4.3%.
Adjusted for inflation using the Consumer Prices Index (CPI) including owner-occupiers’ housing costs (CPIH), regular pay growth was 1.9%, and total pay growth was 1.4%.
The report further showed a decrease of 35,000 vacancies from August to October 2024, bringing the total to 831,000.
This marked the 28th consecutive quarterly fall in vacancies, although levels remained above pre-pandemic figures.
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Lindsay James, investment strategist at Quilter Investors:
“ONS jobs data out this morning provide further evidence that higher interest rates are taking a toll.
“While the UK labour market is still managing to tick stubbornly along, both the unemployment rate and employee annual wage growth have seen an uptick.
“Annual growth in employees’ average regular earnings (excluding bonuses) fell slightly to 4.8% from July to September 2024, down from 4.9% in June to August.
“However, annual growth in total earnings (including bonuses) rose to 4.3% from 3.8%, though this was largely due to one off civil service payments.
“Wage growth has been a real sticking point for the Bank of England, and though it remains well above the Bank’s 2% inflation target and this uptick will be unwelcome as far as the Bank is concerned, it is likely we will see a marked slowdown in the coming months.
“The changes announced at the recent budget will see the government’s coffers receive a major boost from the increase in employer national insurance contributions from April 2025.
“While the Government has not directly placed the tax burden on working people, the higher cost to business is very likely to need to be passed on to employees in one form or another, and we can expect to see a significant slowdown in employee pay increases as a result.
“Meanwhile, the unemployment rate has seen a bigger uptick than had been expected, rising to 4.3% from July to September from 4% in June to August.
“Despite the challenging circumstances of late, the unemployment rate had remained relatively stable in the UK, hovering closely around 4%, but today’s figure bucks the trend slightly.
“However, the broader labour market has continued to cool, with the number of payrolled employees down 9,000 between August and September 2024, and up by just 136,000 annually from September 2023 to September 2024.
“The Bank of England announced another 0.25% interest rate cut last week, leaving the base rate at 4.75%. However, the pace of future cuts is looking much less certain than it once was.
“Expectations for cuts have been scaled back considerably, and rates are now not expected to fall below 4% in 2025.
“Wage growth and unemployment will remain high on the Bank’s agenda, and we are likely to see a continuation of the slow and steady approach it is currently taking.”
Kevin Brown, savings specialist at Scottish Friendly:
“Another inflation-beating rise in wages is positive for households that have been hard hit in cost-of-living terms over the past two years.
“Whether this wage growth is sustainable to the point where families finally feel better off again, remains to be seen.
“With GDP figures to be released on Friday and a largely flatlining economy, wage increases might lose momentum especially with many businesses beginning to feel pressure on their bottom lines.
“Of course, not all families will be feeling the benefit of wage increases.
“For those that are able to save into a rainy-day fund, even small amounts, it can make a real difference when facing unexpected costs. For anyone able to save for the longer-term, then with interest rates falling it might be time to consider investing for the potential to achieve greater returns.”
Paul Nowak, general secretary at TUC:
“Labour’s budget took some vital first steps to repair the economic damage left by the Tories – stronger growth is an essential starting point for more jobs and higher pay.
“The Government’s plan to Get Britain Working must now focus on supporting young people out of long-term unemployment.
“With long-term youth unemployment now at a post-pandemic high and still rising, young people urgently need genuine opportunities to work or engage in training.
“Acting now can set young people up for a better future.
“The Get Britain Working white paper will also be an important opportunity to provide life-changing health and employment support to people who are economically inactive because of ill health, but who desperately want to work again.”
Susannah Streeter, head of money and markets at Hargreaves Lansdown:
“The super-tight labour market has loosened up, with employers hiring fewer staff than financial markets expected and unemployment rising.
“Vacancies have fallen across the economy, and although they’re not back at pre-pandemic levels, it’s clear companies have been more cautious with recruitment.
“Worrisome wage growth has again retreated a little, although not by quite as much as expected, but it still adds to a picture of increasing wariness among employers.
“Growth in pay including bonuses was even weaker, although one-off catch-up payments to public sector workers a year earlier have skewed the figures.”
Matthew Percival, future of work and skills director at CBI:
“The labour market continues to split with signs of employers’ weakening intentions to hire at the same time as a welcome fall in inactivity.
“These figures come against a backdrop of rising concern about spiralling employment costs which are set to increase following last month’s National Insurance Contribution (NICs) rise, the Employment Rights Bill and the latest increase in the National Living Wage.
“Over the coming months, it will be key for the government to work with business to ensure that these costs are manageable.
“When margins are squeezed too far, employers lose the headroom to pursue growth and a growing number are facing difficult decisions between cutting either investment or jobs.”
Danni Hewson, head of financial analysis at AJ Bell :
“This latest set of jobs data puts in black and white what businesses and workers have been feeling.
“The labour market has been steadily tightening with vacancy numbers falling, redundancies rising and that headline unemployment figure creeping up again.
“Whilst there are still more vacancies than there were before the pandemic, over the last few weeks businesses have been warning that the increase in National Insurance coupled with another chunky hike in the national living wage could result in job cuts.
“Even before the Budget, uncertainty about what taxes might rise eroded confidence and many employers pushed back investment decisions or halted hiring plans until they could assess the road ahead.
“After the pandemic there was a dash for workers, with businesses that had been shuttered fighting with other businesses for skilled labour.
“That competition coupled with red hot inflation created an environment where employers were having to dole out chunky wage increases to keep staff on side and in post.
“Whilst wages are still rising, and with inflation tamed for now, those increases are being felt in real terms, but the pace of those increases has slowed to the lowest level in two years.”
Alexandra Hall-Chen, principal policy adviser for employment at the Institute of Directors:
“The small decreases in the number of payrolled employees and vacancies point to a concerning trend of employer caution regarding hiring staff.
“The combination of measures in the Employment Rights Bill and the large increase in employers’ National Insurance contributions is taking a serious toll on employers’ hiring intentions.
“The cumulative effect of these changes will ultimately be to stifle job creation.
“For the first since October 2020, IoD data shows a higher percentage of business leaders are expecting to reduce their headcount (28%) in the coming year than are expecting to increase it (24%).
“If the Government is to meet its objectives of an 80% employment rate and boosting economic growth, it needs to urgently address business’ concerns about the increased risks and costs associated with employing staff.”
Jane Gratton, deputy director public policy at BCC:
“The small uptick in unemployment and decline in payrolled employees suggests some further loosening of the labour market.
“Businesses will welcome a further fall in the rate of inactivity.
“Despite some easing, wage pressures remain stubborn, increasing costs for businesses.
“Many firms are telling us they are being forced to raise prices, put recruitment and investment plans on hold and look for ways to reduce their costs.
“There is a limit to how much additional cost they can absorb.
“Recruitment difficulties are also weighing hard on businesses, with our latest research showing that over three quarters of SMEs are still struggling to find staff with the skills they need.
“Further employment costs are also on the horizon for firms.
“The increase in employer National Insurance contributions, the rise in the National Living Wage announced in the Budget, and the Employment Rights Bill will add further financial pressures.
“It’s crucial that the Government takes steps to minimise the combined impact of recent policy changes and announcements on business.
“We need urgent action to drive growth, tackle the skills crisis, boost workforce health and reduce inactivity in the labour market.”
