Introduction: UK labour market continues to weaken
Good morning, and welcome to our rolling coverage of business, the financial markets and the world economy.
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 Office for National Statistics has reported that the UK’s unemployment rate rose in the March to May quarter, to 4.7%. UPDATED: That’s up from 4.5% in the December-February, 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 21.0%, from 21.4% three months ago.
The agenda
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7am BST: UK labour market report
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10am BST: Eurozone inflation report for June
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1.30pm BST: US retail sales for June
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1.30pm BST: US weekly jobless data
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1.30pm BST: The ‘Philly Fed’ business conditions report
Key events
Vacancies have fallen for three years running
It’s getting increasingly hard to find a job.
Today’s labour market report shows that the number of vacancies across the UK economy dropped in the last quarter, for the 36th time in a row, by 56,000 to 727,000.
That’s fewer than just before the Covid-19 pandemic, which caused a slump in vacancies and then a surge as firms scrambled to hire staff:
Vacancy numbers have now been falling continually for three years, with the total number of vacancies decreasing by an estimated 573,000 since its peak in March to May 2022, the ONS says, adding:
Feedback from our Vacancy Survey suggests some firms may not be recruiting new workers or replacing workers who have left.
Minister for Employment, Alison McGovern, points out that the number of people in employment has risen by almost 400,000 since June-August last year.
“We are helping more people into work and putting more money in their pockets.
“With 384,000 more jobs added to the economy since last summer, real wages continuing to rise and – as these latest figures highlight – inactivity falling, we are all feeling the benefits.
“But we need to go further. Under our plan for change, jobcentres everywhere are changing to end the tick box culture and serve employers and those who need work better. For people in areas with the highest economic inactivity we are funding new work to make sure barriers to employment are removed.
“Alongside this we are fixing the social security system so it helps those who can work into employment whilst ensuring the safety net will always be there for those who need it.”
JLR ‘to cut 500 managerial jobs’
Car maker Jaguar Land Rover has said it is to axe up to 500 management jobs in the UK through a voluntary redundancy programme, PA Media reports.
According to the Daily Mail, JLR has said it would offer voluntary redundancies, and insisted the job losses will not go over 1.5% of its British workforce.
Like many car companies, JLR has faced trade war disruption. Last month it warned of a hit to profits from Donald Trump’s tariffs, after temporarily pausing deliveries to the US.
It also attracted some criticism last December when it unveiled a radical rebrand:
Regular pay grew faster in the public sector than the private sector in the last year, according to today’s labour market report.
It shows that annual average regular earnings growth was 5.5% for the public sector and 4.9% for the private sector in March-May.
Across sectors, pay rose fastest in the wholesaling, retailing, hotels and restaurants sector. at 7.1%. The finance and business services sector had the lowest annual regular growth rate, at 3.1%.
Looking back at the payrolls data, the biggest job losses over the last year have been in the hospitality sector.
There has been a fall of 108,000 jobs in the accommodation and food service activities sector in the last year, the jobs report shows.
But the largest increase was in the health and social work sector, with a rise of 67,000 employees.
Unemployment rate at four-year high
At 4.7% in March-May, the UK unemployment rate for those aged 16 and over is now at its highest rate since April-June 2021.
178,000 jobs lost in Labour’s first year
Today’s jobs report shows that there has been a steady drop in the number of payrolled employees in the UK this year.
Company payrolls peaked in July 2024, the month of the general election, at 30.451m.
But they have fallen in most months since; by last month, payrolls had dropped to an estimated 30.265m.
That, the ONS reports, is a decline of 178,000 employees over the 12-month period since June 2024.
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.
Today’s jobs report estimates that last month, payroll numbers fell by 41,000 people.
But there is some good news for the government. The ONS has revised its estimate for May’s payroll numbers, to a decrease of 25,000, not the whopping 109,000 fall first estimated.
That suggests the job
Introduction: UK labour market continues to weaken
Good morning, and welcome to our rolling coverage of business, the financial markets and the world economy.
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 Office for National Statistics has reported that the UK’s unemployment rate rose in the March to May quarter, to 4.7%. UPDATED: That’s up from 4.5% in the December-February, 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 21.0%, from 21.4% three months ago.
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
