UK labour market is loose, and getting looser, with over four-fifths of the recent jobs fall taking place in retail and hospitality 12 August 2025 The UK labour market continued to weaken – shedding a further 8,000 jobs in June, and 165,000 since its recent peak last October, the Resolution Foundation said today (Tuesday) in response to the latest ONS labour market statistics. The weakening of the jobs market is laid bare both in RTI payroll data – in which the number of jobs fell for the sixth consecutive month – and the number of vacancies, which has now been falling steadily since early 2022, and fell to 718,000 in June (a fall of 44,000 on the quarter). The LFS unemployment rate stands at 4.7 per cent, up from 4.2 a year ago and 3.9 per cent before the pandemic, although these data are somewhat uncertain. Payrolled jobs are still falling fastest in the low paying hospitality sector, suggesting that the mini shock of the employer NI and National Living Wage rise combination in April is still feeding through. Combined, falls in employee jobs in the hospitality and retail and wholesale sectors account for more than four-fifths (86 per cent) of the decrease in employee jobs since last October. With the ONS headline statistics still dogged by reliability problems, the Foundation’s own employment estimate suggests it has fallen to 75.3 per cent for 16-64 year olds (coincidentally, the same as the official ONS rate) – down from 76.6 per cent at its recent peak in spring 2023. Pay growth continues to weaken too, but at a far slower pace than the jobs market. Annual private sector wages grew by 4.8 per cent in the year to June – down from 5.3 per cent the year before – and so are still growing in real terms (by 0.7 per cent). Hannah Slaughter, Senior Economist at the Resolution Foundation, said: “The UK’s post-pandemic labour market was red hot. But that period is officially over – the labour market is loose and getting looser, having shed 165,000 payrolled jobs over the past eight months. “These jobs falls continue to be concentrated in low paying sectors like retail and hospitality. This reinforces the Government’s decision to take a cautious approach to the minimum wage next year as the economic fallout from the recent employer NI rise continues. “Pay growth is decelerating much more slowly than jobs growth, and private sector wages are still increasing by 0.7 per cent in real terms. This is good news for workers who still have jobs. But it will give pause to monetary policy makers on the lookout for signs of persistent inflation.” Notes to Editors For more information contact Rob Holdsworth on 07921 236 972.
