The British job market unexpectedly softened in the three months to March while wages grew at the slowest pace since the pandemic, data from the Office for National Statistics showed Tuesday.
The unemployment rate edged up to 5% in the three months to March, against market expectations that the jobless rate would align with 4.9% in the quarter to February. The UK employment rate was 75% during the quarter to March.
"Early estimates of the number of people on payroll in April point to further weakness," said Liz McKeown, director of economic statistics at the ONS. "However, at the start of the new tax year, these figures carry greater uncertainty and have often seen larger than average upward revisions."
Meanwhile, regular pay in the UK, which excludes bonuses, gained 3.4% year over year in the quarter to March 2026 to 693 pounds sterling per week, representing the smallest pickup since the three months to October 2020. The reading matched consensus expectations and marked a step down from the 3.6% increase for the three months to February 2026.
Across the public sector, growth in regular pay moderated to 4.8%, the softest since the quarter to December 2024, from 5.2% earlier. Meanwhile, private sector wage growth eased from 3.2% to 3%, the lowest since the three months to October 2020, with wholesaling, retailing, hotels, and restaurants showing the strongest regular annual growth of 3.6%.
Including bonuses, annual average weekly earnings grew 4.1% to 749 pounds, higher than the revised 3.9% jump in the prior three-month period and the consensus forecast for a 3.8% gain.
"The latest UK jobs report, which features rising unemployment, sharply lower payrolls and tumbling wage growth, is a reminder that the economy is much less susceptible to 'second round' effects from the incoming energy shock. We're still forecasting a rate hike in June, but that is far from guaranteed," economic and financial analysis publication ING said, adding that a lot will also depend on the inflation report due Wednesday.
