Millions of UK workers will notice extra £1,800 in their pay packets

Unemployment has risen 4.4 per cent despite wages also going up – with staff across the country taking home a boost. Wages , excluding bonuses, continued to rise by 6 per cent between February and April, compared to the same time period in 2023.

It means somebody on an average UK wage of £30,000 will receive a £1,800 boost. The ONS said: "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."

Alice Haines, from BestInvest, added: "Job uncertainty can be very unsettling for workers, particularly those with no backup savings in place. The financial implications for those that cannot secure a new job quickly can be severe with the longer they are unemployed raising the prospect of bills remaining unpaid and debts piling up.

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"Building up solid financial reserves that can cover up to six months’ of expenses is important in uncertain times. Paying down expensive debts and avoiding unnecessary expenditure will also ease any fears around being able to cover a lengthy period without income."

Yael Selfin, KPMG’s chief economist, says today’s “mixed labour market data” is unlikely to shift the dial for the BoE this month, saying: "The unemployment rate ticked up to 4.4%. The recent weakening in demand for staff has been attributed to a lack of roles and firms delaying hiring decisions. This is consistent with a broader trend of retaining existing labour, and could signal that firms expect a pickup in activity so that they could utilise their existing staff more.

“Overall, today’s data are unlikely to warrant an immediate shift in policy from the Bank of England. We expect the MPC to stay put at its June meeting and reassess the incoming data flow over the summer before it embarks on cutting interest rates.”

Matthew Ryan, head of market strategy at global financial services firm Ebury, said: “Sterling largely held its own off the back of the data, as while rapidly rising wages could delay the start to Bank of England interest rate cuts, the increase in joblessness bodes ill for the UK’s growth outlook.

“This will not be particularly welcome news for Rishi Sunak’s Tory Party, who appear to have based their call for early elections on the strength of Britain’s recent economic data.”