The unemployment rate has unexpectedly risen to its highest level for two and a half years, official figures show.
The rate climbed to 4.4% in February to April this year, up from the previous figure of 4.3% and the highest since September 2021.
The Office for National Statistics (ONS) also said there was another increase in the inactivity rate, with 22.3% of working age people deemed not to be actively looking for work.
Wage growth remained strong, with regular pay rising at an annual pace of 6%.
Earnings are continuing to increase faster than inflation, the rate at which prices rise.
“This month’s figures continue to show signs that the labour market may be cooling, with the number of vacancies still falling and unemployment rising, though earnings growth remains relatively strong,” the ONS said.
Economists were expecting an uptick in pay rises but predicted that unemployment would stay the same.
While the ONS has urged caution about the figures because its survey sample is small, they are backed up by the more recent figures on employers’ payrolls, which show the number of employees dropped by 36,000 between March and April, and continued to drop in May.
The number of job vacancies also fell, down by 9,000 to 904,000
The data will be studied by the Bank of England to help decide in the timing of its first interest rate cut since the start of the pandemic.
The Bank will meet next week to discuss interest rates, but KPMG’s chief economist Yael Selfin said the “mixed” data was “unlikely to shift the dial at the Bank of England”, predicting that it would keep rates unchanged this month.
Abrdn’s deputy chief economist Luke Bartholomew said: “UK wage growth remains very strong, but with further evidence that the labour market is cooling, this report is unlikely to significantly change the thinking at the Bank of England.
“We expect the first rate cut in August, but that is dependent on further progress on bringing down underlying inflation pressure over the next few months,” he added.