Further signs of a cooling UK labour market have bolstered expectations that the Bank of England could cut interest rates again next month.
UK unemployment rate rose to 5.0%, from 4.8% in August and above the consensus forecast of 4.9%, figures from the Office for National Statistics showed, along with falling employment and softening wage growth.
Employment fell by 22,000 in the three months to September, a sharp reversal from the 91,000 gain reported in July and well below market expectations of a small increase.
Payroll employment continued to decline, with a 32,000 fall in October following an equivalent drop in September. The September figure was also revised lower from an earlier estimate of a 10,000 decline.
The claimant count rate was unchanged at 4.4% in October.
Average weekly wages excluding bonuses rose 4.6% in the three months to September, down from 4.7% in August and in line with consensus. Private sector pay growth slowed to 4.2%, from 4.4% the previous month.
The pound fell 0.3% versus the US dollar to 1.3132 as the weaker-than-expected labour data adds to evidence that domestic inflationary pressures are receding.
Financial markets are now pricing in an increased likelihood of a rate cut at the December meeting of the BoE's monetary policy committee (MPC).
Deutsche Bank’s chief UK economist, Sanjay Raja, said: "Today’s data should give the MPC more confidence to cut Bank Rate further by year-end. Labour market slack continued to widen, even surprising market expectations. Pay momentum continued to slow, as expected.
"And while Budget uncertainty may be hampering hiring plans heading into Q4-25, one thing is clear: today’s data should continue to strengthen the case for a Christmas rate cut."
Matt Swannell, chief economic advisor to the EY ITEM Club, said: "Alongside cooling pay growth, labour market conditions are gradually loosening."
"In the context of December's MPC meeting, the Autumn Budget and the next two inflation releases are likely to be highly influential factors.
"But evidence of a further cooling in pay pressures removes one potential roadblock to a pre-Christmas rate cut as well as increasing the chances of further rate cuts in 2026."