Published: Tuesday, September 16, 2025 · 6:37 AM | Updated: Tuesday, September 16, 2025 · 6:37 AM
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The UK jobs market continued to show signs of weakness, with pay growth slowing and the number of payrolled employees and vacancies falling.
The latest data from the Office for National Statistics (ONS), released on Tuesday, showed that annual wage growth excluding bonuses was 4.8% in May to July, down slightly from 5% in the previous three months.
The number of employees on the payroll in the three months to July fell by 125,000 from a year earlier, and by 51,000 on a quarterly basis.
The number of payrolled employees fell by 142,000 between July 2024 and July 2025, and by 6,000 between June and July this year. Early estimates for the number of employees on the payroll in August fell by 127,000 on the year, and by 8,000 on the month.
The estimated number of vacancies in the UK fell by 10,000 on the quarter, to 728,000 in the three months to August.
The unemployment rate came in at 4.7% for May to July, which the ONS said was up on the latest quarter and above estimates from a year ago.
Liz McKeown, director of economic statistics at the ONS, said: “The labour market continues to cool, with the number of people on payroll falling again, while firms also told us there were fewer jobs in the latest period.
“The weakness is reflected in a slight increase on the quarter in the unemployment rate. The number of vacancies also fell on the quarter, though the rate of decline appears to be slowing.
“Wage growth excluding bonuses edged down further in cash terms, though it remains strong by historical standards.”
Labour market data is closely watched by the Bank of England (BoE) as it tries to balance keeping inflation under control with maintaining a healthy jobs market. The central bank is due to announce its latest interest rate decision on Thursday, when it is widely expected to keep rates on hold at 4%.
Before that, the ONS is set to published the latest consumer prices index (CPI) reading on Wednesday, with this measure of inflation having ticked higher in recent months, climbing to an unexpected 3.8% in July.
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Rob Morgan, chief investment analyst at Charles Stanley, said: “The UK jobs market continues to cast a shadow over household finances. Unemployment has crept up from 4.4% to 4.7% this year, while the number of employed individuals has steadily declined since last October’s Budget – when the chancellor announced a hike in employer national insurance contributions.
“This reflects growing caution among businesses around hiring and retaining staff, especially in the hospitality industry. Reinforcing the glum picture, job vacancies have been falling consistently.
“Wage growth, which had been robust, is now losing momentum. July’s figure of 4.8% represents a significant drop from the 5.9% seen earlier in the year. While still strong on the surface, it masks the effect of persistent inflation eroding household spending power.”
Capital Economics UK economist Ashley Webb said that while the data showed the UK labour market has continued to loosen, “wage growth remains sticky”.
“Overall, with households’ inflation expectations at a six-year high in August, the stubbornness of wage growth will do little to ease the [BoE’s] concerns about the upside risks to inflation. That lends support to our view that the Bank will keep rates at 4.00% for the rest of this year.”
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