Britain\u2019s unemployment rate has dropped to its lowest level since last summer, but the headline figure masks a more troubling reality: fewer people are working, fewer jobs are available, and wage growth is losing momentum.<\/p>\n
Figures from the Office for National Statistics show the jobless rate fell to 4.9% in the three months to February, down from 5.2% previously and defying expectations of a flat reading.<\/p>\n
At first glance, that suggests resilience. In reality, the decline was driven not by stronger hiring but by a growing number of people stepping away from the labour market<\/a> altogether.<\/p>\n Economic inactivity<\/a> rose sharply, with an additional 70,000 people \u2013 many of them students \u2013 no longer seeking work. The inactivity rate climbed to 21%, its highest level in more than a year<\/a> and a half, underscoring concerns that workforce participation is deteriorating.<\/p>\n Vacancies, often seen as a bellwether of business confidence<\/a>, tell a similarly downbeat story. The number of open roles fell by 29,000 to 711,000, the lowest since April<\/a> 2021, signalling that employers are pulling back on hiring.<\/p>\n Pay growth is also cooling. Regular wages rose by 3.6% in the latest quarter, the slowest pace since late 2020. While earnings are still just ahead of inflation<\/a> \u2013 measured by the Consumer Prices Index \u2013 real wage growth has slipped to only 0.4%, its weakest level in more than two-and-a-half years.<\/p>\n More up-to-date payroll data<\/a> adds to the sense of fragility. The number of employees on company books fell by 11,000 in March, following a revised decline in February, suggesting the labour market<\/a> may already be softening.<\/p>\n Liz McKeown, the ONS\u2019s director of economic statistics, pointed to a clear shift: fewer people are actively looking for work, while wage pressures continue to ease.<\/p>\n The data comes at a precarious moment for the economy. The fallout from the escalating conflict in the Middle East<\/a> is expected to feed through into higher costs and weaker demand, raising fears that today\u2019s modest dip in unemployment could prove short-lived.<\/p>\n Forecasts from the EY Item Club suggest the jobless rate could climb to 5.8% by mid-2027, implying a significant rise in the number of people out of work.<\/p>\n