Unemployment is at its highest level in nearly four years, as the National Insurance rise for employers slows down hiring and increases costs, figures from the most recent Labour Market Survey have shown.

The unemployment rate is now 4.6%, up from 4.5%, while annual growth in wages slowed to 5.2%. That’s below economists’ forecasts, as they were expecting a reading of 5.3%.

Alice Haine, personal finance analyst at DIY investment group Bestinvest, said the April figures showed that the jobs market was “showing signs of strain”.

She said some companies were taking “drastic action on staffing levels amid new cost pressures and an uncertain global outlook”.

Rate cuts ahead?

Weakening wage growth pushed up the FTSE 100 in early trading, however, as investors hoped that the figures might lead to interest rate cuts from the Bank of England.

Andrew Bailey, Bank of England governor, has said he sees this figure as crucial when assessing whether rates can come down, easing pressure on household and Government debt payments.

Sponsored

Sponsored by Post Office

Sarah Coles, personal finance expert at DIY investment group Hargreaves Lansdown, said the figures would “alleviate some concerns about inflation”, allowing the Bank of England to focus on supporting growth by cutting rates.

However, she added that those in work should heed the “worrying signs” in the figures, even if their wages are rising now.

“It’s not about the ease you can see today, it’s about the squeeze you’ll feel tomorrow.

“The Bank of England expects wages to slow even more significantly during the rest of the year as employers offset the rise in employers’ National Insurance with smaller pay increases,” she said.

Worries around data

David Morrison, senior market analyst at fintech provider Trade Nation, flagged that the Office for National Statistics (ONS) has warned that the data may not be accurate because of reduced survey response rates.

The Labour Force survey is being revamped and a new type of survey is expected by 2027.