In the three months to August 2025, unemployment and employment levels both increased, the number of people recorded as being economically inactive rose while the rate stayed the same, and wage growth in the private sector has continued to slow. Vacancy levels also fell for the 39th consecutive period, albeit at a slower rate. Consequently, the labour market picture is broadly unchanged, and creeping unemployment levels remain a top concern.
The UK employment rate (for people aged 16 to 64 years) was estimated at 75.1% in the period between June 2025 and August 2025, which is slightly down on the quarter but up on the year. The UK unemployment rate (for people aged 16 and over) was estimated at 4.8% in the three months to August 2025, an increase on the year and quarter.
The UK economic inactivity rate for people aged 16 to 64 years old was recorded as being 21.0% in the quarter to August 2025, which is unchanged on the quarter but down on the year. The provisional estimate for the number of vacancies in the UK economy in the three months to September 2025 is 717,000, representing a decrease on the quarter (-9,000) and the year (-115,000). This is the second smallest quarterly decline since the middle of 2022.
Estimates for payrolled employees in the UK fell by 93,000 (-0.3%) between August 2024 and August 2025 but increased by 10,000 (0.0%) between July 2025 and August 2025. The early estimate of payrolled employees for September 2025 decreased by 100,000 (-0.3%) on the year, and by 10,000 (0.0%) on the month, to 30.3 million. The September 2025 estimate should be treated as a provisional estimate and is likely to be revised when more data is received next month.
Annual growth in employees' average regular earnings (excluding bonuses) in Great Britain was 4.7% in the three months to August 2025, and annual growth in total earnings (including bonuses) was 5.0%. Annual growth in real terms (adjusted for inflation using the Consumer Prices Index including owner occupiers' housing costs (CPIH)), for regular pay and total pay stood at 0.6% and 0.8%, respectively, across the same period.
This month’s data reflects many of the trends seen previously. Employment levels rose again and wage growth in the private sector has continued to fall, indicating that low levels of productivity and rising business costs are having a material impact on the sorts of salary increases that firms can afford. There are also some new stories emerging, including the number of vacancies levelling off after a prolonged period of decline, and unemployment has hit its highest level in over four years.
Despite some promising messages, the data highlights that there are still challenges confronting the UK labour market which threaten the growth mission. Moreover, while recent funding commitments to tackle youth unemployment are welcome, the Government could address the source of the problem more meaningfully by updating their approach to different policies. This includes acting on business feedback and making the necessary changes to the Employment Rights Bill.
