Unemployment rises as pay growth slows again

Wendy Jones-Blackett, from Chapel Allerton, near Leeds, specialises in designing and making handmade greeting cards.

She told the BBC that while her small business employs seven workers, companies it sub-contracts for printing and storage would likely be more affected by the government’s Budget decisions.

“The thing that we’re having to build in is that their costs are going to go up – their services and the things that we buy,” she said.

“It is going to make us question pay rises – if you want to retain good staff, you want to increase their pay. We want to do that but we’ll have to temper that with rising costs.”

Another survey by the Recruitment and Employment Confederation and consultancy KPMG recently showed that vacancies fell for the 12th month in a row, suggesting there is less demand for workers.

But Rob Wood, chief UK economist at Pantheon Macroeconomics, said that the Bank of England would focus on big trends rather than “small data misses” by the ONS when weighing up its next decision around interest rates.

“Unemployment is likely gradually rising, the labour market is loosening but it remains tight,” he said. “Similarly, wage growth is gradually slowing but remains too high still to deliver inflation sustainably at target.”

Other economists have said they do not believe the latest figures from the ONS would spur the Bank to opt for another rate cut in December.

Work and Pensions Secretary Liz Kendall said that “more needs to be done to improve living standards”.

The Labour MP said that from April, three million of the lowest-paid workers would benefit from an increase to the minimum wage, known officially as the National Living Wage.