Further Breakdown & Analysis
The latest Labour Market Overview from the Office for National Statistics (ONS) presents a mixed picture of the UK jobs market as we enter the autumn. While some indicators show a loosening of conditions, others suggest continued tightness and new challenges for employers.
Key Statistics from the ONS
- Unemployment Edges Up: The unemployment rate has risen slightly to 4.7%, with 1.74 million people now out of work. The data shows that young people continue to be disproportionately affected, with the unemployment rate standing at 32.1% for 16-17 year olds and 11.6% for those aged 18-24.
- Employment Rate Inches Forward: On a positive note, the employment rate has seen a small increase to 75.2%, meaning 34.24 million people are currently in work.
- Economic Inactivity Remains High: Economic inactivity is at 21.1%, or 9.124 million people. While this figure is lower than this time last year, it remains 315,000 higher than pre-pandemic levels, indicating a lasting shift in workforce participation.
- Vacancies Continue to Fall: Job vacancies have fallen once again, down to 728,000. This marks the 38th consecutive quarterly decline and leaves vacancies 67,000 below pre-pandemic levels. The ratio of unemployed people per vacancy has increased to 2.23 (May–July 2025).
- Payrolled Employees Dip: The number of payrolled employees saw a slight dip in August, down by 8,000 to 30.3 million. Over the year, this represents a fall of 127,000, though the figure is still 1.28 million higher than before the pandemic.
- Pay Growth Outpaces Inflation (Slightly): Regular earnings (excluding bonuses) grew by 4.8%, while total pay growth (including bonuses) came in at 4.7%. When adjusted for inflation, growth is more modest at 1.2% for regular pay and 1.0% for total pay.
What This Means for Employers and Job Seekers
The data suggests that the labour market is beginning to shift. While it remains tight, the combination of rising unemployment, falling vacancies, and steady redundancy levels indicates that the intense competition for talent seen in recent years may be easing.
For employers, this could signal a slightly less pressured hiring environment, with more candidates available per vacancy. However, the data also highlights the growing challenge of engaging younger workers, a trend that warrants careful attention. For job seekers, while the overall market may be loosening, the key is to stay informed about which sectors and roles are still seeing high demand.
The modest real-terms pay growth also points to a cautious economic environment, where inflation continues to erode the value of wage increases.
For more insights into the UK labour market and how to navigate these trends, read our blog for more information. We can provide guidance on various topics from attracting top talent to managing your workforce effectively.
