Unemployment creeps up as UK job vacancies fall

Unemployment has ticked up despite a fall in April’s data as it was shown that the UK jobs market weakened in the last quarter. The Office for National Statistics (ONS) said the UK unemployment rate was five per cent in the three months to March 2026. The unemployment rate had dropped to 4.9 per cent at April’s release
The youth unemployment rate also climbed to 16.2 per cent as activity rates for the age group also fell. WPI Strategy economist Martin Beck pointed out the fall in payrolled employees for those under the age of 35 was sharper, dropping by 296,000 since October 2024 compared to a rise of 18,000 for older workers.
“In other words, the slowdown is not being felt evenly. Younger workers continue to bear the brunt of a cooling labour market,” Beck said.
Vacancies also declined further to a five-year low, uncovering the difficulties faced by job seekers in a weakened market. The number of payrolled employees fell by 20,000 over the quarter and an early estimate for the three months to April suggest there could be a fall of 100,000 over three months. Bank of England officials may have taken greater notice of new wage growth figures that could concern some policymakers.
Including bonuses, wage growth was higher than expected at 4.1 per cent. Pay growth over the three months to March was 3.4 per cent when bonuses were stripped from the figure, matching predictions set by economists.
“Latest figures suggest the labour market remains soft, with vacancies at their lowest level in five years and unemployment higher than a year ago,” said Liz McKeown, director of economic statistics.
The latest set of job numbers provide some further context on the state of the British economy after the first quarter of the calendar year. Jack Kennedy, senior economist at Indeed said youth unemployment was a “flashing warning signal”.
“Vacancies are falling, payrolled employment is declining, and the jobless rate is rising – a combination that signals the squeeze on businesses from rising costs and uncertainty is now feeding through into tangible job market deterioration,” Kennedy said.
“The spike in joblessness among young people is a reminder that the workers at the beginning of their careers feel these pressures first and hardest.”
GDP figures separately gave the chancellor Rachel Reeves a boost as the ONS estimated that the economy grew by 0.6 per cent in the first three months of the year.
Monetary Policy Committee members, who set interest rates every six weeks, will be closely eyeing any signs of pay pressures. This focus on wages comes as economists fear that the rise in inflation from the Iran war could push up salaries, leading to a spiralling effect in price pressures.
The tragic element of UK’s national job story is how badly the problems in the labour market are hitting young people. Youth unemployment has climbed to its highest level in 11 years. Young men not in higher education account for the bulk of this.
It seems whichever sector you look at economic date points a picture of deterioration. Retail sales are down, the housing market is struggling, the construction sector has taken a hit and hiring and investment intentions are lacking confidence.
Bright spots exist in certain sectors, not least tech investment and parts of UK’s resilient services sector, but backward-looking data combined with forward-looking thoughts shows a picture of a tough year ahead. Also bearing in mind, the UK faces the prospect of major political disruption and soon yet another autumn of a nervous Budget speculation.