Official data released Tuesday showed the rate increased from 4.7% in the previous quarter, exceeding analysts’ forecasts of 4.9%, AFP reported.
The figures come just days before Chancellor Rachel Reeves delivers her crucial budget on November 26, which is expected to feature tax increases amid weak economic growth.
“The number of people on payroll is falling, with revised tax data now showing falls in most of the last 12 months,” said ONS director of economic statistics Liz McKeown.
The disappointing data deals another blow to Prime Minister Keir Starmer’s Labor government, which trails badly in opinion polls just 16 months after winning the general election.
“There will be no pre-budget comforts that can be taken from today’s employment data,” noted Isaac Stell, an analyst at investment manager Wealth Club.
“Not only has the unemployment rate risen, but wage growth continues to shrink.”
Stell added that businesses have postponed hiring decisions amid budget speculation, waiting to understand the economic landscape before committing to investments.
However, analysts suggested the weak employment data could prompt the Bank of England to cut interest rates at its December meeting, providing some economic relief.
Reeves has already indicated taxes will rise in the budget to reduce government debt and fund public services.