Unemployment rates in Britain have reached a four-year peak, indicating a slowdown in the job market.
Britain's Labor Market Shows Signs of Cooling, According to Recent Data
The labor market in Britain is experiencing a cooling trend, as indicated by recent data released by the Office for National Statistics (ONS).
The latest figures show that job vacancies decreased by 5.8% in the May-July quarter, reaching 718,000. This marks the 37th consecutive quarterly drop in job vacancies, with 16 of 18 industry sectors experiencing a decrease. The sharpest drop was in the arts, entertainment, and recreation sector, down 17.6% from the previous quarter.
The number of payrolled employees has also seen a gradual decrease over the past year. Between June 2024 and June 2025, the number of payrolled employees fell by about 149,000 (-0.5%). Early estimates for July 2025 show a provisional drop of 8,000 employees on the month, totaling around 30.3 million payrolled employees. Over the past eight months, Britain has shed 165,000 payrolled jobs.
The unemployment rate for people aged 16 and over was estimated at 4.7% in the three months to June 2025, representing an increase both year-on-year and quarter-on-quarter. The unemployment rate in the April-June period held at a four-year high.
Stephen Evans, chief executive of the Learning and Work Institute, noted that the largest job losses were in the retail and hospitality sectors. He suggested that a weak economy, rising minimum wage, and higher employer costs could be impacting jobs in these sectors. Hannah Slaughter, senior economist at the Resolution Foundation, stated that Britain's post-pandemic labor market is now loose and is getting looser.
Despite the decline in vacancies and payrolls, wage growth remains relatively robust. Average regular earnings increased by 5.0% annually in the three months to June 2025, with real wage growth (adjusted for inflation) at 0.9%. However, the pace of wage increases is becoming less affordable for employers.
The employment rate (16 to 64-year-olds) rose modestly to 75.3% in the latest quarter, while economic inactivity declined slightly to 21.0%, suggesting more people are employed or actively seeking work despite the rise in unemployment.
Liz McKeown, ONS director of economic statistics, said these latest figures indicate a continued cooling of the labor market. She added that the labor market is showing signs of weakening labor demand and cautious hiring behavior among firms, with some not replacing workers who leave.
In summary, Britain’s labor market in mid-2025 shows signs of cooling with fewer job vacancies and a small decline in payroll employment, alongside a slight increase in unemployment. However, wage growth remains strong, and employment rates are stable to slightly improving, reflecting a labor market that is struggling but not collapsing.
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