Why the rising unemployment rate might not be such bad news

Is unemployment beginning to bite? Or are the workless trying to rejoin the economy? That’s the key question after the unemployment rate rose to 3.7 per cent today. 

Figures released by the Office for National Statistics this morning reveal that even though unemployment is up, ‘economic inactivity’ is starting to fall, having previously grown by some 565,000 people since the pandemic and lockdowns. A city of workers the size of Manchester had stopped working and weren’t looking for jobs either, meaning they weren’t counted in the official unemployment figures. But this trend away from work might be beginning to reverse. 

The number of people who are economically inactive has now fallen by some 76,000 compared with the previous three-month period. As a result both the employment and unemployment rates rose (by 0.2 and 0.1 percentage points). The unemployed are not moving into work, and workers are not losing their jobs either – instead previously inactive people are now saying they want to find work.