UK unemployment is rising, with the jobless rate increasing to 5.2% in the three months to October to December 2025, the latest official figures show, as other indicators point to a labour market that is losing momentum.
The Office for National Statistics (ONS) put the number of unemployed people at around 1.88 million (aged 16 and over, using the international ILO definition). That is about 331,000 higher than a year earlier, taking the unemployment rate up from 4.4% in the same period of 2024 — a rise of 0.8 percentage points over 12 months.
The ONS said unemployment was “up in the latest quarter and above estimates of a year ago”, in a release that also showed vacancies remaining subdued and pay growth continuing to ease, reinforcing a picture of weaker hiring demand.
Unemployment edged higher even compared with the previous rolling quarter, rising from 5.1% in September to November 2025 to 5.2% in October to December. While the increase is small, the level is the highest in close to five years and marks a clear shift from the low unemployment rates seen before the pandemic.
Compared with longer-term benchmarks, the rate is also above where it stood a decade ago. In 2016 Q4, unemployment was 4.7%, while in 2019 Q4 it fell to 3.7%, one of the lowest readings in modern records, before rising again through the pandemic period and the subsequent cost-of-living shock.
Separate, more up-to-date payroll data is also pointing down. An ONS early estimate based on Pay As You Earn (PAYE) Real Time Information suggests the number of payrolled employees was 30.3 million in January 2026, down by about 134,000 compared with a year earlier. Economists often watch the PAYE series closely because it can move faster than the main Labour Force Survey measures, which are collected through household interviews.
Vacancies, a key gauge of employer demand, were estimated at around 726,000 in November 2025 to January 2026. That figure has been broadly flat in recent months but remains well below the highs seen during the post-pandemic rebound and is described by analysts as consistent with a less “tight” labour market, particularly as the number of people looking for work increases.
Pay growth has also slowed. Average earnings growth excluding bonuses (regular pay) was 4.2% in October to December 2025, similar to the pace including bonuses (total pay). After inflation, real pay growth is modest, estimated at roughly 0.5% to 0.8% depending on the inflation measure used, offering households some relief compared with the period when prices rose faster than wages but also signalling that wage pressures in the economy are easing.
One of the most striking changes has been among younger workers. Several recent read-outs put unemployment for those aged 16 to 24 at around 16.1%, a level not seen for more than a decade. Policymakers and labour market specialists often treat youth unemployment as an early warning sign because entry-level hiring can weaken before redundancies rise more broadly.
The Bank of England has also highlighted the concentration of the rise in unemployment among younger age groups and has warned that persistent weakness at the start of working life can have long-lasting effects on pay and career prospects.
Despite the deterioration, policymakers and statisticians have urged caution in interpreting any single indicator in isolation. The ONS has repeatedly warned that Labour Force Survey estimates can be more volatile than usual, and the House of Commons Library has advised that the headline unemployment rate should be considered alongside other measures such as PAYE payroll data and workforce jobs statistics.
The rise in unemployment also sits alongside an elevated level of economic inactivity, which is a separate concept and can shape how tight the jobs market feels to employers. The ONS put the economic inactivity rate for those aged 16 to 64 at about 20.8% in October to December 2025, reflecting a sizeable group of people who are not in work and not actively seeking a job, including students, carers and people who are long-term sick.
The distinction matters because unemployment figures do not capture everyone who is out of work or receiving benefits. Under the ILO definition, a person is counted as unemployed only if they are without a job, have been actively looking for work and are available to start. Broader benefit statistics can include people who are not required to look for work, or who are working but on low incomes.
Looking ahead, the Bank of England’s latest projections suggest unemployment may be close to a local peak but is not expected to fall quickly. In its February 2026 forecasts, the Bank projected unemployment at 5.2% in 2026 Q1, rising to 5.3% by 2027 Q1, before gradually easing to 5.1% in 2028 Q1 and 4.9% in 2029 Q1. In its accompanying narrative, the Bank said it expected unemployment to rise further to around 5.3% by mid-2026.
For financial markets, the combination of higher unemployment, falling payroll counts and softer wage growth has strengthened the argument that inflation pressures are easing, increasing expectations that interest rate cuts could move closer if the disinflation trend continues. At the same time, the Bank has stressed that the outlook depends on how employers respond to weak growth and whether the cooling in demand turns into a sharper pullback in hiring.
Analysts said the next few data releases will be closely watched for signs of whether the rise in unemployment remains gradual or starts to accelerate. Measures of vacancies and payrolled employees are expected to be key, alongside redundancy signals and whether joblessness begins to spread beyond younger workers into older age groups and longer unemployment durations.
For now, the direction of travel is clear in the official headline: compared with a year ago, UK unemployment is growing, not shrinking, and the broader set of labour market indicators is increasingly consistent with a jobs market that is loosening rather than tightening.