The UK jobs market weakened further in the latest ONS figures, as employee numbers declined and unemployment rose to 5.0%, with early signs that geopolitical uncertainty is beginning to weigh.
Industry professionals are reacting to the latest figures below:
Richard Carter, head of fixed interest research at Quilter Cheviot:
“The labour market had already had a disappointing start to the year, and ONS figures out this morning reveal the early impact of the Middle East war has continued that trend. Payrolled employee numbers dropped by a further 104,000 between March 2025 and March 2026 and by 28,000 on the month. Meanwhile, the unemployment rate rose slightly to 5.0%, up from 4.9% the previous month.
“The labour market statistics are a lagging indicator and as ever should be treated with a degree of caution. Nonetheless, they remain an important signal for policymakers, and the Bank of England will be paying particularly close attention to wage data given concerns around rising inflation.
“Annual wage growth remained above inflation at 3.4% for regular earnings excluding bonuses and 4.1% for total earnings including bonuses in January to March, slightly than the previous reading. While regular earnings came in slightly cooler than last month, total earnings increased by 0.3%, so the Bank will be alert to the pace of growth in the coming months.
“Today’s figures only capture the initial effects of the conflict, and the full impact will become more apparent in the coming months as higher costs and the potential for weaker consumer demand begin to filter through. Early indications for April show a substantial 210,000 fall in employee numbers on the year and a 100,000 drop on the month, and the outlook suggests a similar pattern could continue for some time.
“Last week’s GDP data came in better than feared, offering some reassurance on the resilience of the economy. However, with inflation data due tomorrow, we will get a more complete picture of the pressures facing both households and businesses. The Bank of England held rates at its latest meeting, but with several weeks until the monetary policy committee reconvenes, much could change. Markets are grappling with an increasingly uncertain outlook, including the risk that persistent inflation pressures could force central banks to tighten policy once more.”
Luke Bartholomew, Deputy Chief Economist, at Aberdeen said;
“Today’s data confirms that the labour market remains soft. Jobs growth has been weak for sometime, and the Iran conflict seems to be exacerbating the shock, with payrolls employment down sharply. Rising unemployment is in turn weighing on private sector pay growth. Normally this slowing in wage growth would be a positive sign that inflation was on a sustainable path back to the 2% target. But inflation is set to surge in coming months due rising energy prices and other spillovers from the Iran conflict. So weaker cash wages and higher inflation means that real, inflation adjusted, wages will start to fall, weighing further on household spending and growth. All of this creates a dilemma for the Bank of England. But absent a further surge in oil prices, it is hard to see interest rates being increased much if at all in this environment.”
Derrick Dunne, CEO of YOU Asset Management, comments:
“Today’s ONS data shows regular wage growth slowed significantly (3.4% down from 3.6%), while total pay rose (4.1% up from 3.8%). The latter figure will be flattered by annual bonuses paid in the first months of 2026.
“The regular pay figure is the more concerning as it shows wage growth is slowing just as inflation is starting to rise. As such, inflation is set to pile more cost-of-living pressures on households.
“Workers will feel their income levels versus prices under evermore strain as their pay struggles to keep pace with price rises. This could be made worse depending on tomorrow’s inflation reading – which will give us a fuller view of the recent impact of the Middle East crisis.
“Incomes will come under increasing pressure as short-term volatility for costs such as fuel sting their spending power. Indeed, such price rises act as a stealth rate hike, diverting spending toward essential costs and away from other economic activities that aren’t as pressing.
“With GDP appearing to buck expectations, all eyes will now turn to tomorrow’s inflation data as this will illustrate the scale of current challenges for households, the government and Bank of England.
“Anyone unsure what this could mean for their long-term financial plans should consider consulting with a financial planner.”
Danni Hewson, AJ Bell head of financial analysis, comments:
“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.”
Matt Britzman, senior equity analyst, Hargreaves Lansdown:
“The latest UK jobs data puts a softer labour market back at the centre of the rates debate, and may help take some heat out of the recent rise in gilt yields. Payroll employment fell sharply in April, while vacancies and claimant numbers also point to a hiring backdrop that has weakened since the Iran war began. The important point for markets is that businesses appear to be responding to higher costs by cutting headcount, not by pushing wages materially higher to compensate workers. That should help keep the coming inflation spike contained to a short-term energy shock rather than the start of a wage-price spiral, giving the Bank of England a little more room to sit tight rather than rush into further rate hikes.”
Susannah Streeter, chief investment strategist, Wealth Club:
“Stagflation worries are stalking the UK as the latest data shows the labour market continuing to lose momentum, while conflict in the Middle East has fanned the flames of inflation. The jobs numbers show employers are becoming increasingly cautious about hiring amid a backdrop of sluggish growth, geopolitical uncertainty and increasing cost pressures.
The rise in unemployment from 4.9% to 5% adds to mounting evidence that cracks are beginning to widen in the labour market. Vacancies are also continuing their steady descent, falling again to 705,000, the lowest level since early 2021.
There’s another warning sign coming from the employment data, with the early estimate for April showing the number of payrolled employees falling by 210,000 compared with a year earlier, alongside a monthly decline of 100,000. It appears businesses are becoming markedly more defensive as economic uncertainty intensifies.
Wage pressures have eased further, with regular pay growth slowing to 3.4%, down from 3.6% and well below the elevated post-pandemic highs. Ordinarily, private sector wage growth cooling towards 3% would be the kind of mood music likely to prompt expectations of interest rate cuts. But given the discordant notes on inflation right now, pressure is building for rates to stay higher for longer instead. Financial markets are still pricing in three rate hikes by the end of the year, with the possibility of another increase next year.
Wage growth is still only just inching ahead of inflation, and by a meagre amount. This is likely to keep spending subdued, particularly as households brace for more bill increases ahead. This is likely to keep a lid on discretionary purchases, with retailers and hospitality firms particularly vulnerable if consumers continue cutting back on bigger-ticket purchases and prioritising essentials.”
Adrian Matthews, Deputy CEO MetLife UK:
“Improved productivity figures are positive news for UK businesses, but sustaining that progress will depend on keeping the workforce healthy and supported. Millions of working days are still lost to sickness absence every year, affecting performance, morale, and growth.
“Early intervention can make a real difference. Giving employees quicker access to health and wellbeing support can help reduce absence, support faster recovery, and keep productivity moving in the right direction.
”To help address this issue, businesses need to make sure they’re tracking employee absences in the first place. Something MetLife found that one in six (16%) businesses don’t do. Without tracking absence data or spotting early warning signs, businesses can end up firefighting issues rather than preventing them. This could result in costing them as much as £20,735 per employee if they were off on long-term sick leave. This is where products such as Group Income Protection with wellness included can be invaluable in protecting both employees and businesses.”
Melanie Spencer, growth director of Target Group, part of Tech Mahindra, said:
“I think this data highlights why lenders can’t get complacent about collections and arrears. Yes, there’s been some surprising positive news around recently. The latest PMI showed business activity rising in April. Retail sales rose in March, even when excluding the increased cost of fuel. Living standards are improving at the fastest pace since 2022. And the economy unexpectedly grew during the first full month of the Iran war – suggesting the Middle East conflict has not yet affected growth as much as feared.
“But there’s trouble on the horizon. Not only has the number of properties taken into possession already increased – with a total of 1,250 homeowner mortgaged properties being taken into possession in Q1 2026, the future is looking less rosy. Unemployment rose to 5 per cent in the three months to March with figures showing the first effects of the Middle East war on the jobs market. Demand for workers is set to weaken the longer the conflict goes on. Meanwhile the number of job vacancies has fallen to its lowest level in five years
“Lenders need to get on the front foot to ensure their servicing operations have the right people, processes, and platforms in place to handle the increased demand. They need to future-proof their ability to deliver proper customer outcomes to meet their regulatory obligations. A strong customer experience is also critical – proactive communication and early engagement with borrowers can encourage customers to seek support sooner, helping to reduce arrears and improve long-term outcomes for both lenders and borrowers.
