The UK Labour Market in July 2025: A Detailed Look

 

The latest statistical bulletin, "Labour market overview, UK: July 2025," released by the Office for National Statistics (ONS), presents a detailed picture of the UK's labor market. It's a landscape of mixed trends, with some positive movements in employment alongside increases in unemployment and continued falls in job vacancies. Here's a breakdown of the key findings for the period of March to May 2025.

Employment and Unemployment Trends

According to the report, the UK's employment rate for people aged 16 to 64 was an estimated

75.2% in the three months to May 20251. This figure is an improvement over both the previous quarter and the previous year. The total number of people in employment (aged 16 and over) reached a level of

34.130 million in this period, a notable increase of 134,000 from the previous quarter and 754,000 from the previous year2.

However, the picture for unemployment is less positive. The UK unemployment rate for people aged 16 and over was estimated at

4.7% in March to May 2025, which is above the estimates from a year ago and up from the latest quarter3. The number of unemployed people in this age group was

1.673 million, marking an increase of 98,000 over the quarter and 124,000 over the year4.

Economic inactivity for those aged 16 to 64 saw a positive trend, with the rate estimated at

21.0%5. This is below the estimates from a year ago and down in the latest quarter6. The number of economically inactive people in this age group was

9.085 million, a decrease of 139,000 over the quarter and 375,000 over the year7.

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A Look at Earnings and Vacancies

Average weekly earnings in Great Britain continue to grow, but job vacancies are still on the decline.

• Earnings: In the March to May 2025 period, annual growth in employees' average earnings in Great Britain for both regular earnings (excluding bonuses) and total earnings (including bonuses) was 5.0%8. When analyzing the private and public sectors, annual regular earnings growth was higher for the public sector at 5.5% compared to the private sector at 4.9%9. Adjusted for inflation using the Consumer Prices Index including owner occupiers' housing costs (CPIH), regular pay saw an annual growth of 1.1%, while total pay grew by 1.0%10.
  
  

• Vacancies: The estimated number of vacancies in the UK fell by 56,000 to 727,000 in the April to June 2025 period11. This marks the 36th consecutive period of declining vacancy numbers, with decreases seen in 14 of the 18 industry sectors12. This trend is supported by feedback from the ONS Vacancy Survey, which suggests some firms are either not recruiting new workers or not replacing those who have left13. The number of unemployed people per vacancy was
  
  2.3 in March to May 202514.
  
  

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Important Context and Data Quality

The report emphasizes the need for caution when interpreting certain figures, particularly due to the nature of the data sources.

• Labour Force Survey (LFS) Estimates: The LFS estimates from January to March 2025 are considered more representative of labor market conditions as they include the full effect of recent improvements in data collection and sampling methods introduced from January 202415. However, the ONS advises that an increased amount of volatility will remain in LFS estimates from mid-2023 and throughout 202416. The recommendation is to use LFS estimates as part of a suite of indicators, alongside other sources such as workforce jobs and Pay As You Earn (PAYE) Real Time Information (RTI) estimates17.
  
  

• Payrolled Employees: The early estimate for payrolled employees in June 2025, which showed a decrease of 41,000 (0.1%) on the month to 30.3 million, should be treated as a provisional figure that is likely to be revised in the next month's release18.
  
  

This statistical bulletin provides valuable data for understanding the current dynamics of the UK labor market. The combination of increased employment levels and rising unemployment highlights the ongoing challenges and complexities facing the economy.