The UK’s job market has continued to falter as a combination of employment taxes, slower hiring, and higher costs takes its toll on businesses.
Data published by the Office for National Statistics on Tuesday (12 August) shows job openings fell by 5.8% to 718,000 between May to July across nearly all industries. There have now been quarterly declines every month for over three years.
The revised estimate of employees on the payroll in June 2025 was down 26,000 on the month. The provisional estimate for July 2025 was down another 8,000.
In April to June 2025, average weekly earnings were up 5% on the year, excluding bonuses and up 4.6% including bonuses. At 5.7%, regular public sector pay growth continues to outstrip the private sector, at 4.8%.
“Taken together, these latest figures point to a continued cooling of the labour market,” said ONS Director of Economic Statistics Liz McKeown.
“The number of employees on payroll has now fallen in ten of the last twelve months, with these falls concentrated in hospitality and retail. Job vacancies, likewise, have continued to fall, also driven by fewer opportunities in these industries.”
McKeown noted that growth in basic pay stayed steady, while including bonuses, the rate slowed a little, though nominal growth remains strong by historic standards.
“However, real pay growth fell, due to rising inflation. Private sector basic pay growth also edged down and remains below the public sector rate, which increased,” she said.
Analysts will now be keenly watching the release of the UK’s GDP data for June on Thursday (14 August), after the economy shrank in both April and May.
The UK is in recession if GDP falls for two successive three-month periods – known as quarters.
Recruitment down
The ONS data aligns with the latest KPMG and REC UK Report on Jobs survey, which shows recruitment activity across the UK continued to fall sharply at the start of the third quarter
The latest reductions in permanent placements and temp billings were often linked to weak employer confidence regarding the economic outlook and increased pressure on recruitment budgets.
Concurrently, the survey signalled a further steep reduction in overall vacancies that was the quickest since April. The availability of staff meanwhile rose at a substantial pace that was among the quickest since the survey began in 1997, which was often attributed to redundancies and worries over current job security.
Improvements in candidate numbers and increased budget constraints dampened pay growth. Notably, starting salaries rose at the weakest rate in nearly four and a half years.
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