The number of job vacancies in the UK fell by 150,000 or 16.9% in the three months to the end of May 2025 compared to a year ago and is now 7.4% below its pre-pandemic level.
The Office for National Statistics’ latest labour market data also showed a fall in the number of payrolled employees. Early estimates for May 2025 indicate that the number was 30.2 million, a fall of 0.9% from May 2024 – equivalent to 274,000 fewer employees.
UK labour market June 2025
Hiring confidence drops due to ‘reset’ in market
Annual growth in employees’ average earnings was 5.2% for regular earnings, and 5.3% for total earnings (including bonuses), continuing a downward trend.
In the three months to the end of April 2025, the estimated UK employment rate increased slightly by 0.1 percentage points to 75.1%, while the unemployment rate increased 0.2 percentage points to 4.6%.
Economic inactivity decreased 0.2 percentage points to 21.3% compared with November 2024 to January 2025.
Ben Harrison, director of the Work Foundation at Lancaster University, said: “As the government finalises its spending review, today’s figures paint a picture of a weakening labour market that could undermine their ambition of boosting employment during the remainder of the Parliament.
“Regular nominal pay is still rising above inflation but is on a downward trajectory. There is good news for workers in traditionally low-paid sectors such as wholesale and retail who have seen wages rise by 7.7%, in part fuelled by the national living wage increase in April. But overall, the growth in the real value of pay has fallen to its lowest level for 18 months at 1.4%.”
He added that pay increases in recent years have masked underlying challenges facing the labour market.
“Early estimates for the number of payrolled employees suggest these continue to decline into May. And the unemployment rate is now at 4.6%, the highest level for nearly four years,” he said.
“This may be driven by some people coming out of economic inactivity and starting to look for jobs. But with a simultaneous decline in payrolled employment and a reduction in vacancies, this could prove to be a challenging jobs market to find work in.”
The number of unemployed people per vacancy was 2.2 in February to April 2025; up from 1.9 in the previous quarter (Nov 2024 to Jan 2025).
Seemanti Ghosh, principal economist at the Institute for Employment Studies, said: “The first labour market data since the rise in national insurance contributions and the increase in the national living wage has been effective and suggests that employers have responded to rising labour costs by scaling back their workforce and hiring plans. The number of payrolled employees in the UK declined further between March and April 2025, potentially reflecting employers’ reactions to new cost pressures, alongside wider economic uncertainty.
“Vacancies continued to fall across most industry sectors for the 35th consecutive quarter, highlighting growing caution among employers. The UK labour market is showing signs of cooling with sustained decline in vacancies and payrolled employees. Increased operational costs does appear to have dampened employer confidence and hiring activity.”
Isaac Stell, investment manager at the non-advisory investment service Wealth Club, said: “The UK labour market is at a crossroads with the unemployment rate ticking higher and hitting its highest rate since July 2021. Wage growth, albeit firmly ahead of inflation, also continues to slow.
“This latest batch of data should come as no surprise. Businesses have been burdened with not only a huge rise in their national insurance bills but also rising wage bills following the increase to the national minimum wage in April. Consecutive months of rising unemployment therefore were inevitable as businesses look to manage their costs in the face of fiscal pressure.”
Stephen Evans, chief executive of the Learning and Work Institute, said: “Warning signs are growing in the labour market with payroll employees falling 274,000 compared to a year ago and vacancies now 83,000 below pre-pandemic levels. Payroll employment fell particularly sharply in retail and hospitality, down 200,000 on last year.
“This could reflect a combination of economic and international uncertainty and rising employer costs like the minimum wage and national insurance. But the figures are subject to substantial revision, so we should be cautious in drawing conclusions.”
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