This morning has brought us up to date with the latest official figures on the UK labour market and we can start with this.
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 strength of the payroll numbers is that they are relatively timely and the weakness is that they exclude the self-employed. You could easily argue the latest two months are within the margin of error. But it is also true we are trending lower.
Our view continues to be that RTI gives a more reliable read on employees, and is showing a fall in 10 of the last 12 months.
Another reason it has come into wider use as an indicator is the mess that the formal Labour Force Survey has become.
RTI data generally show a decline in employees over the last 12 months, while the LFS shows increases. Caution is still advised when comparing the current LFS results with previous periods.
For those unaware the response rate to the LFS fell as low as 14% which is nothing like enough for a reliable survey. They are doing better than they were.
the total response rate for the UK excluding imputed cases (Table 4) was 21.5%; this is down 0.3 percentage points on the previous quarte.
But as you can see there is still quite some distance to travel which is why the promises of a proper fix keep disappearing into the future. Or if you prefer the statistical equivalent of that poor battered can getting a few more kicks. Oh and I am sorry but imputations from the last quarter are not good enough.
the total response rate for the UK including imputed cases (Table 5) was 26.8%; this is up 1.4 percentage point on the previous quarter.
Looking back in time the response rates a decade ago were around a third better than now. Whilst U do bot think that they were anything like a Gold standard it would be a considerable improvement on where we were. It also reminds me of my critique of the way that the Bank of England emphasises labour market data. Did no-one there bother to check the problems here. On the positive side we have done our bit as Kevin has completed the forms at his office. But as to the numbers they will be troubled for a while.
as change estimates include both “real” change in the labour market and change caused by improvements to the operation of the LFS.
Vacancies
This measure has come into play because of the above as well. The latest numbers exhibit the same downwards trend.
The estimated number of vacancies in the UK fell by 10,000 (1.4%) on the quarter, to 728,000 in June to August 2025.
This is the 38th consecutive period where vacancy numbers have dropped compared with the previous three months, with vacancies decreasing in half of the 18 industry sectors.
The Covid period really boosted the vacancy numbers so I am not sure what we learn from comparisons with it. But over the past year we have seen a clear weakening.
Total estimated vacancies were down by 119,000 (14.0%) in June to August 2025 from the level of a year ago, and are 67,000 (8.4%) below their pre-coronavirus (COVID-19) January to March 2020 level.
Workforce Jobs
The WFJ survey is another check which is more comprehensive and is also showing a downturn in more recent times.
The estimated number of WFJ decreased to 36.8 million in the UK in June 2025. This is a quarterly fall of 182,000 (0.5%) since March 2025.
There is a critique of looking at payroll employment in the detail below.
The quarterly decrease was largely caused by a decrease of 159,000 (3.7%) in self-employment jobs. There was also a fall of 3,000 (0.0%) in employee jobs, a fall of 19,000 (36.5%) in government-supported trainees, and a fall in HM Forces jobs of 1,000 (0.6%).
As an aside how do the claims of boosting defence spending match up with a fall in jobs? But the main move here is a decline in self-employment and should that continue and be combined with the fall in employment then it is clear the UK labour market is heading south.
On the other side of the coin this methodology shows a stronger post Covid recovery than the others.
The estimated number of WFJ increased on the year by 139,000 (0.4%). They are 1.2 million (3.5%) above their pre-coronavirus (COVID-19) pandemic March 2020 level.
Although it too has seen considerable changes as I have looked back to what I wrote on the 12th of September 2023 when we were told this.
In June 2023, UK workforce jobs fell to 36.7 million.
On today’s update it is 36.3 million.
Hours Worked
Here we get the first positive indicator.
Total actual weekly hours worked increased in the latest quarter (May to July 2025) and over the year. Both men’s and women’s working hours increased in the latest quarter and over the year.
The number of hours worked rose by 5.7 million on the quarter to 1,088 million.
Wages
In terms of the economy there was some welcome growth in real wages.
Annual growth in employees’ average earnings was 4.8% for regular earnings (excluding bonuses) and 4.7% for total earnings (including bonuses)……..Using the Consumer Prices Index excluding owner occupiers’ housing costs (CPI) to adjust for inflation, annual growth in real terms was 1.2% for regular pay and 1.0% for total pay.
The problem is that wage growth is slowing and we know that inflation has been picking up. Plus if we include owner occupied housing via our cost of living measure called RPI we see that the annual rate was 4.8% in July so we may well be at an unwelcome cross over. Indeed if we look at the numbers for the second quarter from the Bank of England Agents cross over may well have happened.
Recent company visits continue to suggest average pay settlements for 2025 of 3.5%–4%.
The breakdown is rather awkward for the present government as whilst it clearly had a policy of boosting public sector pay it has consequences.
Annual average total earnings growth was 5.1% for the public sector in May to July 2025. This is down on the previous three-month period when it was 5.3%. Annual average total earnings growth was 4.6% for the private sector, slightly down on the previous three-month period (4.7%).
As a Londoner I can vouch for the negative impact of last week’s tube strike. Plus there is the impact of the pay rises on our struggling public finances which contributes to more expensive debt costs.
Comment
As you can see these numbers rather go with the monthly GDP release for July which showed 0% growth. There was a little more hope for output from the PMI survey but even it remained downbeat for employment.
Employment remained a weak spot in August. Workforce
numbers decreased for the eleventh consecutive month,
reflecting widespread concerns about the impact of rising
payroll costs.
Also there is another consequence of today’s numbers which will be welcome for pensioners but adds to the pressure on the public finances.
NEWS. The State Pension is set to rise 4.7% next April. We know this as it is ‘triple locked’, ie rises by the higher of 2.5% or inflation or average earnings rise. The final figure has just come in, for earnings up to July and it’s the highest of the three, at 4.7%. ( Martyn Lewis).
