Statements from ManpowerGroup UK and REC in response to latest ONS employment figures
The UK employment market is currently experiencing a notable slowdown, with hiring confidence waning and a slight dip in employment levels, according to recent reports.
According to the Office for National Statistics (ONS) Labour Market report for June 2025, the UK employment rate for individuals aged 16 to 64 stands at 75.1%, a modest increase from last year and the previous quarter. However, the unemployment rate has risen to 4.6%, the highest in nearly four years, indicating a softening of labour market conditions. Economic inactivity slightly decreased to 21.3%. Vacancies have fallen for the 35th consecutive quarter to 736,000, showing continued weakening in demand for labour across most sectors.
The ManpowerGroup Employment Outlook Survey for Q3 2025 reports a hiring outlook of +19%, a significant drop of 12 percentage points from the previous quarter. This marked decline in hiring confidence is attributed to rising costs, trade challenges, and policy changes like National Insurance and Living Wage increases. Sectors such as Communications Services, Energy & Utilities, and the Public Sector show negative hiring intentions for the first time since 2021.
Sectorally, Oxford Economics predicts a slight dip in UK employment in H2 2025, driven mainly by job cuts in lower-paid private sectors such as accommodation and food services. This offset is only partially balanced by public sector job growth, especially within the NHS, which remains strong due to political priority and productivity challenges.
The labour market appears to be undergoing a phase of realignment, influenced by cost pressures, external trade uncertainties, and broader economic volatility. While hiring intentions have dropped sharply, this is seen as a temporary recalibration rather than a deep recession in jobs. The public sector continues to be a relative employment anchor, though its growth rate may slow with government budget tightening.
The persistent decline in vacancies and rising unemployment signal that employers are cautious, likely holding back recruitment until economic conditions stabilize. This creates challenges in talent attraction and retention, despite still relatively strong wage growth, though wage increases have softened recently.
The recovery phase is likely to begin in 2026 with private sector employment expected to improve gradually, though overall unemployment may edge higher before normalizing.
Neil Carberry, REC Chief Executive, has emphasized the importance of removing unnecessary additional burdens on hiring from the Employment Rights Bill, given the current job market numbers suggesting more workers who were previously inactive are trying to return to work. He also believes that the government's industrial strategy needs to be truly effective to support businesses in the current job market. Carberry sees the job market figures as a reminder of the old adage that the jobs market shadows the economy, with a delay of a few months.
In light of these developments, it is clear that the UK employment market is navigating challenging times. However, with a gradual recovery anticipated in the near future, there is hope for a return to more stable conditions in the coming months.
The ManpowerGroup Employment Outlook Survey for Q3 2025 reveals a significant drop of 12 percentage points in hiring confidence, largely due to rising costs, trade challenges, and policy changes like National Insurance and Living Wage increases, which may impact the finance and business sectors.
Sectorally, the persistent decline in vacancies and rising unemployment signal that employers across various sectors, including finance and business, are being cautious, likely holding back recruitment until economic conditions stabilize. This creates challenges in talent attraction and retention.
