- Unemployment rises to five-year high of 5.2%
- Economic inactivity fell by 0.1% in the three months to December 2025
- Payrolled employees fell by 130,000 in 2025 compared to the previous year
- Wage growth falls to 4.2%
- Vacancy numbers estimated to have nudged up fractionally in the three months to January
Danni Hewson, AJ Bell head of financial analysis, comments on the latest UK jobs figures:
“The surprise jump in unemployment lays bare the weakness in the labour market that’s led to the number of people out of work per vacancy hitting a fresh post-pandemic high.
“Businesses have been crystal clear that government policies which increased labour costs resulted in them pressing pause on their hiring plans, and potentially sped up another change which could have a huge impact on job creation in the years ahead.
“Weaving AI into businesses to increase productivity is a positive move and may be the answer to a decades-old issue. But for young people in particular, already struggling to get their first taste of work, AI could result in a scarcity of entry level posts.
“With more people hunting jobs and the number of jobs being created remaining fairly static, the pressure on businesses to ramp up pay has receded, with wage growth in the private sector hitting a five-year low.
“The gloomy picture painted by recent UK growth figures and today’s evidence of a lacklustre jobs market has increased the likelihood that the Bank of England will cut rates at the next meeting in March. It has also increased expectation that rates could reach as low as 3% by the end of the year.
“As with most economic data, these figures are backwards looking, and the slight uptick in vacancy numbers in the three months to January may suggest the labour market could recover. Cooling inflation and falling interest rates should help boost confidence among businesses and consumers and kickstart a period of renewed growth, especially if the uncertainty which was particularly acute at the end of last year isn’t repeated.”
