The UK’s labour market ‘continues to weaken’, according to the latest employment and unemployment data, just released, highlighting the economic challenges facing the government.
The ONS has reported that the UK’s unemployment rate rose from March to May, to 4.7%. That’s up from 4.6% a month ago, and higher than economists had expected.
Today’s jobs report also shows that the estimated number of vacancies in the UK fell by 56,000 on the quarter, to 727,000, in April to June 2025, as companies continued to cut back on hiring.
Wage growth slowed too: annual growth in employees’ average earnings for both regular earnings (excluding bonuses) and total earnings (including bonuses) was 5.0%. That means the cost of living squeeze has tightened, as inflation has now risen to 3.6%. That’s down from 5.3% for regular pay, and 5.4% for total pay, a month ago.
ONS director of economic statistics, Liz McKeown, says: “The labour market continues to weaken, with the number of employees on payroll falling again, though revised tax data shows the decline in recent months is less pronounced than previously estimated.
"Pay growth fell again in both cash and real terms, but both measures remain relatively strong by historic standards. The number of job vacancies is still falling and has now been dropping continuously for three years.”
The report also shows that the UK employment rate increased to 75.2% – up 0.2 percentage points on the previous quarter – while the economic inactivity rate (which tracks how many people are neither in work nor looking for a job) dropped to 21%, from 21.4% three months ago.
Today’s jobs report shows that there has been a steady drop in the number of payrolled employees in the UK this year. Payrolls peaked in July 2024, the month of the general election, at 30.451m but they have fallen in most months since. This decline will fuel criticism of Rachel Reeves's budget last autumn, which hiked taxes on employers, leading to warnings that companies would cut back on hiring.
The agenda • 7am BST: UK labour market report • 10am BST: Eurozone inflation report for June • 1.30pm BST: US retail sales for June • 1.30pm BST: US weekly jobless data • 1.30pm BST: The ‘Philly Fed’ business conditions report
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