UK unemployment rate falls ahead of Budget
- UK unemployment rate fell to 4.7% in the three months to August
- Number of payrolled employees edged up in the past month but is down over the quarter
- Vacancy numbers fell at fastest rate since the start of the year
Danni Hewson, AJ Bell head of financial analysis, comments on the latest UK jobs figures:
“The chancellor may well see today’s jobs figures as more relatively positive news ahead of the Budget next week, as the unemployment rate fell to 4.7% in the three months to August. It’s another sign of the resilience of the UK economy despite dwindling consumer confidence and nerves about rising prices.
“There were early signs that the number of payrolled employees has been edging up over the past month, but the picture over the quarter is a different one and suggests a labour market chugging uphill rather than wheeling down to a successful golden quarter.
“The surprise fall in unemployment also puts another tick in the hike column for Bank of England rate setters weighing up whether the UK economy can handle an upward move. Markets are now pricing in a 95% chance of a November hike and a more than 50% chance rates could reach 4.25% by the end of 2026.
“‘Subdued’ would be a good word to describe the UK labour market. Earnings growth slowed and, at 3.7%, total pay growth now stands at the lowest level in six years, with vacancy numbers also falling to levels not seen since Covid.
“John Healey has come under increasing pressure from all sides to deliver measures that will help solve a youth unemployment crisis. The latest set of data showed the unemployment level amongst 16 to 24-year-olds edged up over the last quarter to the highest level since the three months to October 2025.
“Smaller firms say increased labour costs are preventing them from hiring and there have been renewed calls from businesses for the chancellor to step in. Increasing the employer NI threshold even a little could make hiring part-time workers or young people looking for their first weekend job a more viable consideration.”
Danni Hewson
Head of Financial Analysis
Danni spent more than 19 years at the BBC, presenting and reporting on business news across a variety of programmes – including BBC Breakfast, BBC News Channel, BBC Look North and latterly Radio 5 Live’s flagship business programme ‘Wake up to Money’. She is now responsible for producing analysis and commentary across a broad range of subjects at AJ Bell, from financial markets, to economics and personal finance.
Contact details
Mobile: 07593 451 437
Email: danni.hewson@ajbell.co.uk