Unemployment Rate

The labour force includes everyone who is either employed or unemployed. People who are not working and not looking for work, such as many students, retirees and full-time carers, are not counted in the labour force, and so are not counted as unemployed.

The rate is calculated by dividing the number of unemployed people by the total labour force. For example, if 3 million people are unemployed in a labour force of 50 million, the unemployment rate is 6%.

The unemployment rate is one of the most closely watched economic indicators. Rising unemployment often signals a weakening economy, while falling unemployment usually indicates economic strength. Central banks consider it when setting interest rates, since very low unemployment can push up wages and inflation.

The headline rate does not capture everything. It does not include discouraged workers who have stopped looking, or people working part-time who want more hours. For this reason, statistical agencies also publish broader measures of labour market slack.