- Vacancy numbers down by 44,000 in the three months May-July to 718,000, the lowest since April 2021
- Unemployment holds steady at 4.7% but the number of payrolled employees fell by 26,000 from May-June 2025
- Wage growth excluding bonuses holds at 5%
Danni Hewson, AJ Bell head of financial analysis, comments on the latest UK jobs figures:
“In a nutshell, if you are looking for a job today, you’re going to find it much tougher than you would have just a year ago.
“Firms have had to shoulder big tax and wage increases; they’re worried that further tax hikes could be coming down the track and they’re being cautious.
“That caution is manifesting itself in recruitment decisions. They’re putting off taking on new staff and they’re not replacing many of those who leave.
“There will be plenty of speculation about the role AI might be playing in those decisions, but money will be at the forefront of employers’ minds and the cost of labour has weighed on firms’ ability to grow.
“There is still plenty of concern about the validity of the ONS Labour Force Survey, but payroll data and a plethora of updates from recruitment firms fill out the picture, which shows that cracks are getting deeper.
“It’s a slow erosion rather than a seismic shock, but the cooling trend will undermine any expectation that the supercharged growth that the government promised just a year ago might be rediscovered at the back end of the year.
“The number of payrolled employees has fallen in nine out of the last twelve months and it’s not surprising that the decline has been concentrated in the narrow-margined retail and hospitality sectors.
“There are some areas of growth, in particular the numbers employed in health and social work has increased but that has been offset by declines elsewhere.
“Above inflation pay growth will be welcomed by those who have more money in their pay packets each month to help them deal with price hikes and potentially allows them to power a bit of growth through household spending.
“It’s a double-edged sword, passing through to persistent service sector inflation, keeping hiring in check and limiting the Bank of England’s scope for further interest rate cuts this year.
“But despite all the challenges, and many criticisms of the impact of the government’s tax policies on the country’s ability to grow, the UK is expected to have eked out a tiny bit of forward momentum over the second quarter of the year and with trade policies creating some stability the outlook is one of cautious optimism, if Budgetary black clouds don’t obscure the view.”
