UK unemployment rate spikes, surpassing levels from over two years ago

The unemployment rate unexpectedly rose to 4.4% in the three months to April, the highest in two and a half years. Despite this, wage growth remained strong, with earnings rising faster than prices. The inactivity rate also increased, reaching its highest level in nearly a decade. The Office for National Statistics noted signs of a cooling labor market, with vacancies falling and unemployment rising. Regular earnings increased by 6% annually, while pay rose by 2.9% when adjusted for inflation. The number of employees dropped by 36,000 between March and April. The TUC reported rising unemployment and falling job vacancies across all regions of the UK. The ONS is expected to show a further rise in unemployment, despite the economy growing by 0.6% in the first quarter. Employers are seeking to reduce headcount, with more planning to make roles redundant or impose hiring freezes. Reasons cited include worsening revenues, rising costs, and economic uncertainty. Public sector employers are more likely to reduce staff due to budget cuts. The OECD has urged investment in workers' skills to boost employment after many left the labor market during the Covid-19 pandemic.