Britain’s unemployment rate unexpectedly increased in March amid a broader cooling in the labor market as the country grapples with rising labor costs and disruptions stemming from the Middle East conflict. 

Early estimates for April pointed to continued weakness in the sector. 

UK’s unemployment rate rose to 5% in March against expectations it would remain steady at 4.9%, data from the Office for National Statistics (ONS) said on Tuesday. 

The March increase saw unemployment come back in sight of the 10-year highs seen earlier this year. 

Payrolled employee growth for March 2026 was revised to a decrease of 28,000 from the prior month, greater than earlier estimates for a 11,000 drop, ONS data showed.

Early estimates for April 2026 pointed to an outsized, 210,000 drop from April 2025, ONS data said, and a 100,000 drop from March. 

The number of people claiming unemployment benefits also grew more than expected in April.

Britain’s labor market has been on a sustained decline in recent months, pressured by a combination of domestic policy raising the cost of labor and from increasing overseas economic headwinds.

“The sharp weakening in the labour market in April may help to restrain the recent upward march in gilt yields by highlighting that, so far at least, the Iran war is prompting businesses to reduce headcounts rather than raise wage growth to compensate workers for higher inflation,” Capital Economics analysts wrote in a note. 

Tuesday’s print comes just days after data showed the UK economy growing more than expected in the first quarter of the year, amid some resilience in services activity.

But analysts broadly expect the economy to weaken in the coming quarters, especially in the face of headwinds from the Middle East conflict.