The United Kingdom (UK) unemployment rate remains low at 4.2 per cent, according to the latest official figures from the Office for National Statistics (ONS).

The unemployment figure has remained at 4.2 per cent for the past three months. The country’s all-time lowest unemployment rate was 3.4 per cent, which was recorded in December 1973 while the highest rate was 11.9 per cent in April 1984.

Despite the unemployment rate remaining static, the number of jobs on offer fell to under a million. A drop of 43,000 jobs was estimated by the ONS from its previous tally – with 988,000 vacancies available from July to September.

ONS data also shows there was a slight increase in the percentage of economic inactivity. The rate grew 0.1 percentage points to 20.9 per cent from June to August compared to the three months from March to May.

Revised data methodology

The publication of latest unemployment data was delayed, after changes to the ONS survey method in an effort to produce the best estimates and greater accuracy. Some interest groups have been critical of the new process.

The experimental figures included new data sources to compensate for a falling response rate to the Labour Force Survey of households, which usually forms the basis of Britain’s job market statistics. Under the previous methodology, the unemployment rate had been reported as 4.3 per cent for the three months to July rather than 4.2 per cent.

The publication of experimental estimates of headline numbers raised “questions about the reliability of the data”, according to economics research firm, Pantheon Macroeconomics. For the Resolution Foundation think-tank, “the poor quality of this data will hamper key decisions, including the Bank of England’s on interest rates and the government on labour market inactivity.” 

Contraction in available vacancies

The number of vacancies fell across the economy—14 of the 18 industries surveyed posted a reduced number of jobs. It was the 15th consecutive period of contraction in the labour market.

Nevertheless, the figures demonstrated the labour market was loosening – with unemployment set to peak at 4.8 per cent in the first three months of 2024, Pantheon forecast. The estimate of payrolled employees in the UK for September 2023 is largely unchanged on the month, down 11,000 on the revised August 2023 figure, to 30.1 million. 

The September 2023 estimate should be treated as a provisional estimate and is likely to be revised when more data are received next month. UK payrolled employee growth for August 2023 compared with July 2023 has been revised from a decrease of 1,000 reported in the last bulletin to a decrease of 8,000.