Rachel Reeves was dealt another heavy blow on Tuesday morning as the Office for National Statistics (ONS) released new unemployment and earnings growth data. The rate of UK unemployment, the ONS said, rose to 5.1% in the three months to October, up from 5% in the three months to September.

And the UK average regular earnings growth fell to 4.6% in the three months to October. It was 0.9% higher after taking Consumer Prices Index inflation into account, the ONS said, meaning the rate rose to its highest level for nearly five years and wage growth slipped back further.

Emplyment in the public sector, however, reached 6.18million in September 2025 an increase of of 7,000 if compared to figures from June 2025, and an increase of 62,000 compared with September 2024.

Younger workers in particular were struggling in the difficult hiring climate, according to the ONS.

The ONS said average regular wage growth also pulled back again, to 4.6% in the three months to October, down from 4.7% in the previous three months, and was 0.9% higher after taking Consumer Prices Index (CPI) inflation into account.

The latest figures estimated the number of employees on payrolls plunged by 38,000 during November to 30.3 million in further evidence of a weakened jobs market.

Liz McKeown, ONS director of economic statistics, said: “The overall picture continues to be of a weakening labour market.

“The number of employees on payroll has fallen again, reflecting subdued hiring activity, while firms told us there were fewer jobs in the latest period. This weakness is also reflected in an increase in the unemployment rate while vacancies remained broadly flat.

“The fall in payroll numbers and increase in unemployment has been seen particularly among some younger age groups.”

The ONS said that unemployment jumped by 47,000 for those aged between 25 and 34, while it was 28,000 higher for those aged 16 and 17. Across the market, vacancies fell slightly, down 2,000 to 729,000 between September and November.

The Work and Pensions Secretary said figures showing the unemployment rate at its highest level for nearly five years reflect the “scale of the challenge” Labour inherited.

Pat McFadden said: “There are over 350,000 more people in work this year and the rate of inactivity is at its joint lowest in over five years, but today’s figures underline the scale of the challenge we’ve inherited. That is why we are investing £1.5 billion to deliver 50,000 apprenticeships and 350,000 new workplace opportunities for young people – giving them real experience and a foot in the door.

“To go further and tackle the deep-rooted issues of our labour market, Alan Milburn is also leading an investigation into the whole issue of young people inactivity and work.”

The Conservatives blamed Labour’s “growth-killing policies” for rising unemployment figures. Shadow work and pensions secretary Helen Whately said: “Losing your job is hard at the best of times, but in the run up to Christmas it’s particularly cruel.

“But thanks to Labour’s growth-killing policies, that’s the sad reality for many people this Christmas.”

She pointed to the hike on employer national insurance contributions and the measures included in the Employment Rights Bill.

Shadow business secretary Andrew Griffith said Labour were “pursuing a suite of anti-business policies that is sending employers to the wall”.