The º£½ÇÊÓƵ unemployment rate has climbed to a post-pandemic peak, further signing the employment market has failed to recover despite interest rate reductions and modifications to last year's employer tax assault.
The Office for National Statistics (ONS) revealed the unemployment rate had reached five per cent as payrolled workers fell by 32,000 in September.
It also projected an additional decline of 32,000 payrolled staff throughout October, though this figure is expected to be revised in future publications.
ONS experts noted that vacancy numbers remained "broadly unchanged" during the previous three months.
Statistics also indicated a deceleration in wage increases, as reported by .
During the three months ending in September, average earnings excluding bonuses rose 4.6 per cent, which stays above thresholds where economists feel more confident about inflation declining to the Bank of England's two per cent objective.
When including bonuses, pay increases reached 4.8 per cent, marginally down from the previous month's five per cent reading.
Public sector wage growth also maintained its lead over private sector levels.
"Taken together these figures point to a weakening labour market," said Liz McKeown, director of economic statistics at the ONS.
"The number of people on payroll is falling, with revised tax data now showing falls in most of the last 12 months. Meanwhile the unemployment rate is up in the latest quarter to a post pandemic high."
The latest figures are likely to unsettle some decision-makers at the Bank, as well as officials within the Treasury and Department for Work and Pensions.
Members of the Bank's Monetary Policy Committee (MPC) with a more hawkish stance have overlooked rising unemployment, voicing concerns about high inflation expectations across the º£½ÇÊÓƵ economy.
The persistence of inflation in the º£½ÇÊÓƵ has been partly attributed to higher wage packages increasing costs on firms, leading to sustained price growth, as argued by Clare Lombardelli and Megan Greene.
The Bank's central projections anticipate that wage growth in the private sector could fall to around three per cent by mid-2027.
However, more dovish members on the MPC have suggested that a weakened jobs market, due to fewer vacancies and increasing unemployment, could suppress growth and bring inflation down to two per cent.
Treasury officials and economists from the Office for Budget Responsibility (OBR) will also scrutinise new labour market data released on Tuesday morning, as it will be the last set of results presented to them before the Budget on 26 November.
The consistent increase in the unemployment rate over the past seven months from 4.4 per cent could lead the OBR to revise its more optimistic forecast.
In reaction to the most recent data, 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.
"We've introduced the most ambitious employment reforms in a generation to modernise jobcentres, expand youth hubs and tackle ill-health through stronger partnerships with employers.
"This week we're going further by launching an independent investigation that will bolster our drive to ensure all young people are earning or learning."
Jack Kennedy, a senior economist at the jobs platform Indeed, said new data indicated businesses were still hesitant about hiring new staff ahead of a challenging Budget.
"Employer confidence remains fragile ahead of a Budget that's likely to bring significant tax increases, with many continuing to be cautious on hiring until they get greater visibility on the policies to be announced," Kennedy said.
It was stated in March that it was anticipated the unemployment rate would peak at 4.5 per cent in 2025 before falling back to 4.1 per cent by 2028. .
However, economists at the Bank have suggested the unemployment rate could yet peak at 5.1 per cent in the coming months.
