Unemployment rate remains at highest rate in five years

New official figures show UK unemployment has remained at its highest rate in five years. The unemployment rate was 5.2% in the three months to January, according to the Office for National Statistics (ONS).

This rate was last seen in January 2021, before last month.

According to the statistics body, the increase over the past three months was largely driven by unemployed young people. The unemployment rate among 18 to 24-year-olds rose to 14.5%.

Analysis of payroll data from the Resolution Foundation think tank shows that 19.2% of people in this age group are out of work and not in full-time education. This is the highest rate since 2014.

Despite the rise in unemployment, the impacts were not felt evenly: male employment stands at 5.5%, while female unemployment is at 4.8%.

Employers have faced higher costs for employing staff due to the rise in employers’ national insurance contributions in April, per Sky News.

Additionally, higher minimum wages for younger workers have contributed to the increase in unemployment among that cohort, according to Catherine Mann, a senior Bank of England economist and interest rate setter.

Meanwhile, wage growth was at its lowest in over five years, the ONS said.

It means pay is still rising faster than inflation, but more slowly than before, in both the private and public sectors.

Average pay rose by 3.8%, while average weekly earnings increased by 3.9%. A month earlier, both measures had stood at 4.2%.

The latest figures do not yet reflect the impact of the Iran conflict, which is expected to raise inflation as oil and gas prices climb.

Rising prices can curb spending, putting pressure on businesses and leading to fewer jobs.

If the conflict drags on, signs of recovery could fade, with unemployment likely to rise further.