The UK's job market showed signs of strain in July 2025, according to the latest Office for National Statistics (ONS) data. Unemployment rose to 4.3%, marking the highest level since early 2023, while wage growth continued its gradual decline to 5.7%.
Key Labour Market Trends
The ONS report highlights several concerning trends:
- Unemployment increased by 0.3 percentage points to 4.3%
- Wage growth (excluding bonuses) slowed to 5.7% from 6.0%
- Economic inactivity remained stubbornly high at 21.7%
- Vacancies fell for the 15th consecutive month
What This Means for Workers and Businesses
Economists suggest the figures indicate a cooling labour market, with the Bank of England likely to view slowing wage growth as positive for inflation control. However, real wages continue to lag behind price rises for many workers.
"While the slowdown in wage growth may ease inflationary pressures, households are still feeling the pinch," commented Sarah Wilkinson, chief economist at the British Chambers of Commerce.
Sector-Specific Impacts
The technology and professional services sectors saw the sharpest slowdown in pay growth, while retail and hospitality maintained relatively stronger wage increases. Regional disparities remain significant, with London showing the strongest job market performance.
Looking ahead: Experts predict unemployment could peak at 4.6% by year-end if current trends continue, though much depends on broader economic conditions.
