Jobless rate rises and vacancies slump to lowest level in five years – ONS

Danni Hewson, head of financial analysis at AJ Bell, said: “Anyone who has been hunting for a job over the past few months will be acutely aware of the challenge, especially younger workers looking for a first taste of employment. The number of vacancies has fallen back to the lowest level since the three months to April 2021, a time when many of the country’s workplaces were shuttered and schools were closed for the second time in a year.

“It’s no surprise that the sectors feeling the most pain are hospitality and retail. Both operate on thin margins, both employ a significant number of part-time workers, and both are sectors that often provide young people with their first jobs. The impact of changes to National Insurance and business rates, along with weak consumer confidence, have created a perfectly dismal storm that’s seen many household names leave the high street forever.

“Whilst tomorrow’s inflation data is expected to show a slight fall in the headline rate of CPI, that relief is expected to be short lived. So news that regular earnings growth has slowed to 3.4%, or a meagre 0.3% when adjusted for price rises, will be a blow to many cash-strapped households.

“The price being paid at the pump is already putting pressure on many people’s living standards and the energy shock caused by the Iran war is expected to make everyday life harder over the coming months, with the price cap expected to rise along with basic staples like food and drink.

“The economy has been growing faster than had been expected and the IMF has upgraded its forecast for growth for 2026, but these figures suggest early momentum has already begun to fall back. Businesses are acutely aware that the rest of the year will be tough going and they are prioritising cost cutting over investment, with AI providing opportunities to slim down their labour force.

“Whilst it’s important to view April’s figures as a first estimate, the significant fall in payrolled employees is a good indication that unemployment is heading up and that labour market weakness is proving persistent.”