UK jobs data released on Tuesday pointed to further signs of cooling, with unemployment edging higher and wage growth slowing in the private sector.
Economists said it was not likely to be enough to derail a Bank of England interest rate cut widely expected at this week's meeting.
The unemployment rate rose to 5.1% for the three months to October, up from 5.0% previously, according to the report from the Office for National Statistics.Employment fell by 16,000 over the same period, less than the 75,000 decline forecast and the 22,000 fall seen in the preceding period. ONS director of economic statistics Liz McKeown said: “The overall picture continues to be of a weakening labour market. The number of employees on payroll has fallen again, reflecting subdued hiring activity, while firms told us there were fewer jobs in the latest period."
She added: “This weakness is also reflected in an increase in the unemployment rate, while vacancies remained broadly flat. The fall in payroll numbers and increase in unemployment has been seen particularly among some younger age groups."
Wage growth slowed across much of the private sector, with average weekly earnings excluding bonuses rising 4.6% year-on-year, unchanged from the previous month.
Private sector pay growth fell to 3.9%, the lowest reading since November 2020, while public sector wages increased further.
McKeown noted: “Wage growth slowed further in the private sector, while increasing again in the public sector, reflecting the continued impact of some pay rises being awarded earlier than they were last year.”
Vacancy numbers were broadly unchanged, with early estimates suggesting a small decrease of 2,000 to 729,000 in the three months to November 2025.
In more timely data, the claimant count rate held steady at 4.4% in November, with jobless claims up by 20,100, a smaller rise than October’s 29,000.
Estimates of payrolled employees declining further in November, falling by the biggest month-on-month reduction in five years.
Matt Swannell, chief economic advisor to the EY ITEM Club, said that "while revisions to the pay data suggest wage growth has slowed less quickly than previously thought over the last few months, it has still lost momentum", with year-on-year pay growth easing to just 2.7% for the three months to October.
On falling payrolls numbers, which had seemingly stabilised over the summer as businesses came to terms with the rises in employer National Insurance Contributions (NICs) and the National Living Wage, he noted that recent months had been hit by public sector organisations recruiting fewer staff.
"Challenges are likely to continue for the labour market in the near-term, as public sector hiring remains soft and private sector demand is weak," Swannell said.
A cut at this week's Bank of England meeting "appears likely, but it will be a close call," he added, with Wednesday's inflation data presenting the "remaining hurdle", but the soft economic growth outlook and a loosening labour market should allow the Monetary Policy Committee to cut interest rates further in 2026.