The UK jobs market is losing momentum. Wage growth is slipping, payroll numbers are falling, and vacancies continue their long decline, according to the latest Office for National Statistics release.
Annual pay excluding bonuses grew 4.8% in May to July, down from 5% in the previous three-month period. Including bonuses, pay growth came in at 4.7%, meeting expectations but a far cry from the pace earlier this year.
Payroll employment is falling steadily. The number of payrolled employees dropped by 142,000 between July 2024 and July 2025, and by 6,000 between June and July. Early estimates for August show a further decline of 127,000 on the year and 8,000 on the month. Vacancies fell by 10,000 on the quarter to 728,000, marking a 38th consecutive fall.
Unemployment edged up to 4.7% in May to July, higher than a year ago, while the employment rate dipped to 75.2%. The economic inactivity rate was unchanged at 21.1%.
ONS director of economic statistics Liz McKeown said the figures show the labour market “continues to cool” with payrolls down again and fewer jobs being reported by firms.
Nicholas Hyett, investment manager at Wealth Club, said the headline stability masks “worrying signs” underneath.
“Vacancies have fallen for the 38th consecutive quarter and are now less than half the number of people claiming unemployment benefits. With workforce jobs also slipping, it looks like the economy simply isn’t creating enough positions, and the problem is slowly worsening. With wages still rising faster than inflation, it seems unlikely the Bank of England will ride to the rescue with rate cuts any time soon.”
The data lands just ahead of the Bank’s latest rate decision on Thursday. Policymakers are expected to keep interest rates on hold at 4% as they weigh sticky inflation against a cooling jobs market.