UK unemployment rate sees surprise fall to 4.9%

The UK's unemployment rate fell to 4.9% in the three months to February, according to the latest official figures.

The fall was unexpected, with most analysts predicting the rate would remain unchanged at 5.2%.

However, the figures from the Office for National Statistics (ONS) showed that the number of workers in payrolled employment slipped by 11,000 in March, the first piece of data that covers the period of the Iran war.

The ONS also said that wages rose at an annual pace of 3.6% between December and February, the weakest pace since late 2020. However, despite the slowdown, pay is still rising faster than inflation.

The jobs market "showed signs of stabilising in February, but a reversal may be on the horizon", said Yael Selfin, chief economist at KPMG UK.

"Unemployment fell slightly to 4.9% in the three months to February, consistent with survey evidence suggesting hiring activity was recovering before the conflict in the Middle-East.

"However, unemployment is likely to trend higher in the coming months as firms scale back on hiring in response to rising costs and weaker demand."