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Unemployment at 5.2%

ended 17. February 2026

The UK unemployment rate for people aged 16 years and over was estimated at 5.2% in October to December 2025. This is up in the latest quarter and above estimates of a year ago, according to official data published this morning. Other key findings below. Your thoughts as a business owner or job market expert ASAP please. But all in all, not great is it?

  • The early estimate of payrolled employees for January 2026 decreased by 134,000 (0.4%) on the year, and by 11,000 (0.0%) on the month, to 30.3 million.
  • Estimates for payrolled employees in the UK fell by 121,000 (0.4%) between December 2024 and December 2025, and decreased by 6,000 (0.0%) between November 2025 and December 2025. This is based administrative data from HM Revenue and Customs (HMRC).
  • The UK employment rate based on the LFS for people aged 16 to 64 years was estimated at 75.0% in October to December 2025. This is down in the latest quarter, but unchanged on estimates of a year ago. 
  • The UK Claimant Count for January 2026 increased on the month but decreased on the year to an estimated 1.691 million.
  • The estimated number of vacancies in the UK has remained broadly flat across recent periods. Early estimates in November 2025 to January 2026 suggest a small increase of 2,000 (0.3%), to 726,000, compared with August to October 2025.
  • Annual growth in employees' average earnings in Great Britain was 4.2% for both regular earnings (excluding bonuses) and total earnings (including bonuses) in October to December 2025. Annual average regular earnings growth was 7.2% for the public sector and 3.4% for the private sector. 
  • Annual wage growth in real terms, adjusted for inflation using the Consumer Prices Index including owner occupiers' housing costs (CPIH), was 0.5% for both regular pay and total pay in October to December 2025.
  • Annual wage growth in real terms, adjusted for inflation using the Consumer Prices Index excluding owner occupiers' housing costs (CPI), was 0.8% for regular pay and 0.7% for total pay in October to December 2025.

Liz McKeown, Director of Economic Statistics, ONS, said: "The number of workers on payroll fell further in the final quarter of the year, reflecting weak hiring activity, although it is largely unchanged in the latest month. Over the same period the unemployment rate increased, with data showing that more people who were out of work are now actively looking for a job.

"The number of vacancies has remained broadly stable since the middle of last year. Alongside rising unemployment this means that the number of unemployed people per vacancy has increased, reaching a new post-pandemic high. Meanwhile, redundancies are also showing an upward trend.

“Private sector wage growth continues to slow and is at its lowest rate in five years. Public sector pay growth also slowed in the latest period but remains elevated, still affected by some pay awards being implemented earlier in 2025 than 2024, although this effect has now started to diminish.”
 

6 responses from the Newspage community

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Craig Fish
Director at Lodestone Mortgages
Today's jobs data sends a clear warning signal to the property market. Unemployment climbing to 5.2% and payrolled employees falling by 134,000 year-on-year tells us confidence is quietly draining from the economy and nervous employees don't commit to mortgages. Wage growth of 4.2% sounds acceptable, but once inflation is stripped out, real earnings growth is just 0.5%. Households aren't feeling better off, and that shows up directly in buyer hesitancy. The one silver lining? A softening jobs market gives the Bank of England more reason to cut rates and markets are already pricing that in. But make no mistake: rising unemployment, falling payrolls and near-flat real wages will create real headwinds for transaction volumes this spring. Sellers need realistic pricing, buyers need certainty, and anyone in the market needs a mortgage broker who understands that lenders will be watching these numbers very closely. The jobs market is cooling and the property market will feel it.
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Rohit Kohli
Director at The Mortgage Stop
Today’s jobs data is grim. Unemployment at 5.2%, payrolled staff down, wage growth easing. From where I sit running a small firm, the issue is obvious: no certainty, no confidence means no hiring. The small business owners I speak to say the same. When rules and costs keep shifting, you don’t invest and you don’t take people on. Young people are squeezed most, making it harder to get that first job and no chance of buying a home. If CPI nudges toward 2% tomorrow, the Bank should cut. But let’s be honest: a base rate cut won’t mask the incompetence this government is showing at every level.
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Justin Moy
Managing Director at EHF Mortgages
This is more evidence that the UK economy is faltering and the government just doesn't understand how its choice of higher taxation is leaving many firms unable to afford staff. With the emergence of AI now able to undertake tasks at a fraction of the cost of humans, company owners are switching to cheaper alternatives and we will see more unemployment unless the tax burden is reduced significantly.
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Babek Ismayil
CEO at homebuying platform OneDome
If there's one silver lining to this underwhelming data, it's that it makes a rate cut at the next Bank of England meeting in March more likely. Slowing wage growth and rising unemployment may just see the doves gain the upper hand. Of course, Wednesday's inflation data will also be a key contributor to any rate cut. But all in all, this data does suggest a rate cut is coming in the spring.
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Daniel Hobbs
CEO at New Leaf Distribution
Rising unemployment on top of dire GDP data will boost the chances of a rate cut in March, unless inflation delivers a curveball. Quite frankly, the UK economy is in a mess, with confidence among businesses dwindling by the day. If Labour can't find a way out of the mess, all eyes will turn to the Bank of England to do so.
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Sam Kirk
Managing Director at J-Flex Rubber Products
These stats only demonstrate what most already believe: this Government just hasn't got a clue what they're doing. They promised growth and stability, but instead people are losing jobs and hope.