The rate of UK unemployment has risen to 5% in the three months to September, showing signs the jobs market has weakened, according to new official figures.
It is the highest rate since the period covering December 2020 to February 2021, according to the Office for National Statistics (ONS).
The increase in the unemployment rate was higher than expected, coming in above the 4.9% projected by many analysts ahead of the Budget on 26 November.
Average wage growth was 4.6% in the third quarter, down from 4.7% over the three months to August.
Liz McKeown, director of economic statistics for the ONS, said: “Taken together, these figures point to a weakening labour market.
“Meanwhile the unemployment rate is up in the latest quarter to a post pandemic high. The number of job vacancies, however, remains broadly unchanged.”
In the three months to September 2025, the number of payrolled employees also fell by 109,000 (0.4%) over a year.
The ONS data also shows nearly 1.7m people are claiming unemployment benefits, a slight decrease on the figure from a year ago.
Responding to the latest statistics, Work and Pensions Secretary Pat McFadden said: “Over 329,000 more people have moved into work this year already, but today’s figures are exactly why we’re stepping up our plan to get Britain working.”
Richard Carter, head of fixed interest research at Quilter Cheviot, said with the Budget two weeks away “many businesses will have shelved any major hiring plans”.
“Having already faced a significant rise in national insurance costs earlier in the year, they will likely be nervous to make any real commitments until they know whether further costs are heading their way,” he said.
Tina McKenzie, policy chair of the Federation of Small Businesses, said the increase in unemployment and drop in the number of people on payroll shows the government’s “complacent attitude to jobs and businesses”.
She said small businesses had been stopped from employing staff by “ever increasing regulation, litigation and tax”, and called for Rachel Reeves to “take action that backs jobs and growth”.
Broadly, the number of job vacancies have remained unchanged, with about 723,000 between August and October 2025.
The ONS has said the unemployment rate should be treated with caution and it is taking additional steps to address concerns about the quality of the data.