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UK Jobless Rate Hits 5% as Payrolls Shrink, Raising Stakes for Reeves’s Budget

The softer labour figures have lifted expectations of a December Bank of England rate cut.

Overview

  • The ONS reported unemployment at 5.0% in the three months to September, the highest since early 2021 and above the 4.9% consensus.
  • HMRC data showed payrolled employment fell by 32,000 in October, leaving roughly 180,000 fewer payrolled workers than a year earlier.
  • Average regular pay growth slowed to 4.6% in the quarter, with public-sector pay running at about 6.6% against roughly 4.2% in the private sector.
  • Job vacancies were broadly unchanged at around 723,000, as economists said hiring is being delayed by uncertainty over the 26 November Budget and potential tax rises.
  • Analysts said the weaker jobs and pay data increase the likelihood of a Bank of England rate cut in December, with markets marking down sterling and borrowing costs.