Britain’s rate of unemployment has risen again and the number of vacancies fell back further in a sign of a weakening jobs market as the UK faces deepening economic gloom, official figures have shown.

The Office for National Statistics (ONS) said the rate of UK unemployment rose to 3.7% in the three months to October, up from 3.6% in the previous quarter.

The data also showed that vacancies dropped by 65,000 in the three months to November to 1.9 million – the fifth quarterly fall in a row and the first annual fall since the beginning of last year.

Pay growth v inflation
(PA Graphics)

The figures signalled that more people are choosing to return to work, with the inactivity rate falling to 21.5% as those in their 50s opt to go back to work at a time of rocketing costs.

The ONS said regular wages, excluding bonuses, rose by 6.1% in the three months to October – a record outside of the pandemic – as firms are under increasing pressure to increase earnings.

But wages continued to be outstripped by rising prices, falling by 3.9% after Consumer Prices Index inflation is taken into account.

It comes ahead of official figures on Wednesday that are expected to show inflation remaining at eye-watering levels in November, but easing back to 10.9% from 11.1% in October.

The ONS data also revealed a widening gap between private sector and public sector pay, growing by 6.9% and 2.7% respectively – among the biggest differences seen on record.

UK unemployment rate
(PA Graphics)

It comes as a month of rail disruption begins on Tuesday when workers walk out for their first of a wave of 48-hour strikes, as nurses also prepare to take unprecedented industrial action.

The ONS said there had already been 417,000 working days lost to labour disputes in October, which is the highest since November 2011.

Chancellor Jeremy Hunt said: “To get the British economy back on track, we have a plan which will help to more than halve inflation next year – but that requires some difficult decisions now.

“Any action that risks embedding high prices into our economy will only prolong the pain for everyone, and stunt any prospect of long-term economic growth.”

The latest figures showed a 23,000 rise in the number of jobless Britons to 1.2 million in the three months to October, but there was also an increase in those employed – up 27,000 to 32.8 million as 76,000 fewer people were classed as economically inactive.

The more timely pay as you earn (PAYE) data revealed that the number of workers on UK payrolls rose by 107,000 between October and November to 29.9 million.

Sam Beckett, ONS head of economic statistics, said: “This quarter the proportion of people neither working nor looking for a job fell, driven by a drop in the number of working-age people regarding themselves as retired.

“This tallies with other data which suggest more people in their 50s are thinking of going back to work, at a time when the cost of living is rising rapidly.

“With more people re-engaging with the labour market, there were more in employment and also more who were actively looking for a job.”

“Though job vacancies are still at a very high level, they continue to fall and are now lower than they were a year ago.”