Labour Market Report August 2025

The ONS reported this month that the UK labour market shows continued cooling, with job losses in sectors like hospitality and retail, falling job vacancies, and slowing wage growth. This trend in employment, vacancies, and pay are attributed to ongoing cost pressures from the National Insurance contributions (NICs) and the National Living Wage rise in April, combined with global uncertainty. 

The reported stated:

The estimated number of vacancies in the UK fell by 44,000 (5.8%) on the quarter, to 718,000, in May to July 2025. This is the 37th consecutive period where vacancy numbers have dropped compared with the previous three months, with vacancies decreasing in 16 of the 18 industry sectors.
 

Key Trends

Employment & Unemployment

  • Employment Rate: Increased by 0.3 percentage points to 75.3% in April–June 2025.

  • Unemployment Rate: Rose slightly by 0.1 percentage points to 4.7%.

  • Economic Inactivity: Decreased by 0.4 percentage points to 21.0%, driven by reductions among students and retirees.

 Job Vacancies

  • Vacancies: Fell by 44,000 (5.8%) to 718,000 in May–July 2025, marking the 37th consecutive quarterly decline.

  • Unemployed per Vacancy: Increased to 2.3, up from 2.1 in the previous quarter.

Earnings & Wages

  • Regular Pay Growth: Held steady at 5.0% year-on-year in the three months to June 2025.

  • Posted Wage Growth: Increased to 5.9% in July, its highest since January.

  • Sector Highlights: Dental sector led with 7.0% annual wage growth; software development had the lowest at 1.1%.

Regional Insights

  • Highest Employment Rate: South West at 80.2%.

  • Lowest Employment Rate: North East at 68.2%.

  • Highest Unemployment Rate: London at 6.0%.

  • Lowest Unemployment Rate: Northern Ireland at 2.4%.

Key Takeaways

  • Hiring Trends: Weak hiring continues, with job postings 23% below pre-pandemic levels.

  • Wage Dynamics: Persistent wage growth, particularly in sectors like dental, may challenge inflation control efforts.

  • Regional Variations: Significant disparities in employment and inactivity rates across regions.

For more detailed statistics and breakdowns, visit the ONS Labour Market Overview for August 2025.

 

Mascolo & Styles