UK labour market ‘continues to weaken’ as unemployment rate rises and wage growth slows – business live

2 months ago 58

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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%. That’s up from 4.6% a month ago, 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.