In the three months to July 2025, unemployment and employment levels both rose, the economic inactivity level and rate fell, and strong wage growth continued to present signs of slowing. Vacancy levels also fell for the 38th consecutive period. As a result, the labour market picture is fundamentally the same, with cooling labour market conditions and dampened hiring intentions emerging as key messages.
The UK employment rate (for people aged 16 to 64 years) was estimated at 75.2% in the period between May 2025 and July 2025, which is slightly up on the quarter and the year. The UK unemployment rate (for people aged 16 and over) was estimated at 4.7% in the three months to July 2025, also up on the year and quarter.
The UK economic inactivity rate for people aged 16 to 64 years old was recorded as being 21.1% in the quarter to July 2025, marginally down on the year and the quarter. The provisional estimate for the number of vacancies in the UK economy in the three months to August 2025 is 728,000, representing a decrease on the quarter (-10,000) and the year (-119,000).
Estimates for payrolled employees in the UK fell by 142,000 (-0.5%) between July 2024 and July 2025, and by 6,000 (0.0%) between June 2025 and July 2025. The early estimate of payrolled employees for August 2025 decreased by 127,000 (-0.4%) on the year, and by 8,000 (0.0%) on the month, to 30.3 million. The August 2025 estimate should be treated as a provisional estimate and is likely to be revised when more data are received next month.
Annual growth in employees' average regular earnings (excluding bonuses) in Great Britain was 4.8% in the three months to July 2025, and annual growth in total earnings (including bonuses) was 4.7%. Annual growth in real terms (adjusted for inflation using the Consumer Prices Index including owner occupiers' housing costs (CPIH)), for regular pay and total pay stood at 0.7% and 0.5%, respectively, across the same period.
This month's data does not contain drastically different messages compared to those told in previous months. Wages are continuing to rise in real and nominal terms, but the rate of growth is slowing. Another rise in unemployment, dip in vacancies, and a moderate rise in redundancy levels on the year also suggests that the demand for workers is continuing to weaken, and the rising cost of business is having a material impact on hiring intentions and, in some cases, job security.
It is more important than ever for government to be mindful of the trade-offs involved when introducing new policies that add to employers' cost base. Government can help address some of this risk to employers' cost base and support firms to invest in jobs, productivity, and growth through their approach to different policies. In the case of skills, this involves publishing a clear roadmap for Growth and Skills Levy reform, specifying what non-apprenticeship courses will be eligible for funding and when. For the Employment Rights Bill, this means engaging with remaining business concerns during parliamentary 'ping-pong'.
