- Unemployment in the three months to February fell from 5.2% to 4.9%
- But early data showed payrolled employees fell 11,000 between February and March
- Vacancy numbers between January and March fell to lowest level since April 2021
Danni Hewson, AJ Bell head of financial analysis, comments on the latest UK jobs figures:
“Today’s jobs data follows hot on the heels of February’s GDP figures and shows the UK economy seemed to have dusted itself off after a difficult end to 2025, as businesses dealt with increased costs of keeping workers on the books and all the speculation ahead of the chancellor’s second Budget.
“Unemployment fell back from its five-year high in the three months to February, but it’s impossible to know whether this was a real turning point for the UK economy or simply a post-Budget boost.
“The Iran war has changed the playing field and the associated energy price shock and fears over supply issues are set to rekindle inflation and push companies to rethink their hiring intentions and potentially cut staff. That’s expected to push the unemployment number back up, potentially peaking around 5.8%.
“Even though February’s figures were broadly positive, if you look under the bonnet the weakness in the labour market hadn’t really gone away. Hiring remained sluggish and the data suggested fewer students have been looking for a job to run alongside their studies – potentially a reaction to the dearth of jobs available for younger workers.
“Wage growth has also continued to ease off, now at its lowest rate in over five years, something which Bank of England rate setters had been particularly focused on. The MPC is expected to hold fire on making changes to the UK base rate when it meets next week as it waits to understand how prices are going to be impacted by events in the Middle East, but markets are expecting the next move will be a hike rather than the cut that had been widely anticipated before the start of the war.
“The last time the Bank faced the decision to hike rates to combat rising inflation, the UK jobs market was in a very different place, with vacancy numbers boosted by a post-pandemic hiring spree. Now vacancies have fallen to a five-year low and that’s only expected to get worse once the full impact of rising prices takes hold.”
