Key points:
- Employment appears to have been relatively flat in recent months, amid subdued hiring appetite and limited job losses.
- Wage growth continues to gradually cool but remains robust.
The UK labour market has stabilised in recent months after weakening earlier in the year, settling into a pattern in which hiring appetite remains weak but job losses are limited.
The latest Office for National Statistics figures showed a fall of almost 10,000 in payrolled employment during September. However, payroll figures for the prior two months were revised to show increases instead of declines, suggesting a flatter trend than previously thought. Payrolled employment is down around 100,000 from a year ago, prior to the October 2024 Budget when the Chancellor announced a significant hike in employer National Insurance Contributions.
Vacancies fell by 9,000 to 717,000 in the three months to September, the second-smallest decline since mid-2022. The unemployment rate has gradually crept up to 4.8% in recent months, a four-year high but still relatively low by historical standards.
With employer confidence still somewhat fragile, the labour market seems unlikely to shake off its stagnancy soon. However, improved visibility following this year’s budget in late November may give businesses a little more certainty ahead of their workforce planning for next year.
While pay pressures continue to ease, regular wage growth is still running hot at 4.7% year-on-year and is expected to recede only gradually. With inflation pressures still a concern for the Bank of England, any further interest rate cuts are unlikely until 2026.
