The UK labour market continues to cool. Unemployment has risen to 4.7% and economic inactivity has fallen to 21.1%, suggesting more people are staying in or returning to work.
At a glance
- Unemployment rate: 4.7% (May–Jul 2025) — 1.67 million people
- UK employment rate: 75.2%, up slightly on the quarter (May–Jul 25)
- Economic inactivity: down to 21.1%
- Earnings growth: 4.8% excluding bonuses (quarter ending Jul 25); total pay up 4.7%
- Inflation (CPI): 3.8% (Aug 2025), against the Bank of England’s 2% target
- Bank Rate: 4%
- Job vacancies: 728,000 (Jun–Aug 2025), down 1.4% on the quarter
- New job postings: 661,639 in Aug 25, down 3.8% on July
Data source: Office for National Statistics, Recruitment & Employment Confederation, Change Specialists Ltd.
About these figures. These are the statistics as the Office for National Statistics published them at the time of this report. ONS routinely revises Labour Force Survey estimates afterwards, so today’s figures for the same period may differ slightly. For the latest official figures, see our UK labour market tracker, which is refreshed daily direct from ONS and the Bank of England.
What it means
The cooling trend continues. Payrolled employees fell further, unemployment rose and vacancies declined again, particularly in larger businesses. Total weekly hours increased, reflecting heavier workloads for those in work.
The signals are mixed, not uniformly negative. The employment rate edged up and nominal wage growth remains strong, even as structural pressures point to a softer market.
What it means for you. Employers benefit from increased candidate availability. Work seekers need to sharpen skills and adaptability to stay competitive. As decision-makers return after the summer, expect restrained hiring and wage strategies — with some organisations already shifting towards contract and interim resource.
Slower GDP growth and cautious business investment point to a measured pace. It matters that these figures do not dampen innovation or digital transformation.
Written by Julian Brown, Practice Director, Change Specialists.