The figures, which cover the period before the Budget, reflect the decision by many employers to slow down or freeze hiring until they knew the Chancellor Rachel Reeves’s plans for taxation and spending.

Many firms have also said that they are still feeling the effects of last year’s Budget, when national insurance rises made hiring more expensive.

Estimates for employees on company payrolls dropped by 149,000, or 0.5%, in October compared with the previous year.

Liz McKeown, the ONS director of economic statistics, said the figures indicate “a weakening labour market”.

Ms McKeown also said young people were especially affected by the fall in payroll numbers and the rise in unemployment.

The government has said it will launch an investigation into youth unemployment and inactivity.

“My last interview feedback stated how they had 290 applications for a policy analyst role … for a niche policy area. I think that just shows how competitive it really is out there.”

James Reed, the chief executive of Reed Recruitment, told BBC Radio 4’s Today programme that “the economics of hiring at entry level is becoming less and less appealing to employers”.

The government has pledged to scrap the two-tier minimum wage and create a new rate for all adults.

But many businesses have said this will make them less inclined to hire young workers with little or no experience.

Kris Gumbrell, the chief executive of Brewhouse and Kitchen chain of pubs, said the hospitality industry feels “punished” by government policy.

Mr Gumbrell said he posted a job advert recently for a front-of-house role which got 200 applications in a few hours.

“It’s young people that have suffered the most,” he said, adding that the government’s new plans for apprenticeships don’t work for the hospitality sector.

The Bank of England is due to make a decision on Thursday on whether to cut interest rates or hold them at 4%.

Yael Selfin, chief economist at KPMG UK, said a rate cut is now likely.

“The latest evidence from the labour market should be sufficient to justify a rate cut later this week,” she said.

However, inflation in the UK is currently almost double the Bank’s target of 2%. Lower interest rates can fuel inflation as the cost of borrowing is lower.

Richard Carter, head of fixed interest research at Quilter Cheviot, said the Bank is “still walking a tightrope,” because it wants to encourage growth but also keep inflation tracking downward.

The ONS is due to publish the latest inflation figures on Wednesday.

“Should inflation come in lower as expected tomorrow, a rate cut could well be ticked off everyone’s Christmas list,” Mr Carter said.

Responding to the ONS figures, Secretary of State for Work and Pensions Pat McFadden said the data “underline the scale of the challenge we’ve inherited”.

“That is why we are investing £1.5bn to deliver 50,000 apprenticeships and 350,000 new workplace opportunities for young people – giving them real experience and a foot in the door.

Helen Whately, shadow work and pensions secretary, accused the government of implementing “growth-killing policies” that would lead to job losses in the run up to Christmas.

“Fourteen months in a row of higher unemployment means thousands of families will be struggling through the holiday season and without a steady income heading into the New Year.”

ONS statistics are used in deciding government policy, which affects millions, and are also used by the Bank of England to make key financial decisions, such as setting interest rates.

But a review of the ONS was highly critical of the agency, calling into question the quality of the economic data it produces.

The ONS has struggled, as have many statistical bodies, with tight budgets and with the problem of getting people to fill in the questionnaires needed for their data.

Specifically with employment and wage figures, the response rate for the Labour Force Survey is consistently low.

Only one in four of businesses responded to this employment survey.