The March 2025 Labour Market Report provides a comprehensive overview of the current state of employment, unemployment, and economic activity. This report offers crucial insights into the evolving dynamics of the workforce, highlighting key trends that are shaping the economic landscape.
This report serves as a vital tool for policymakers, businesses, and individuals seeking to understand the current labour market conditions and anticipate future trends.
Here’s a summary of the key indicators from the March 2025 Labour Market Report,
Job Vacancies:
Vacancy numbers have shown to be broadly unchanged in total, indicating a potential plateau in employer demand. With early estimates suggesting a small increase of just 1,000, this takes the estimated number of vacancies in the UK (Dec 2024 – February 2025) to 816,000. However, there are significant sectoral variations, with some industries experiencing increased demand while others see a decline.
Nominal Earnings:
Nominal earnings continue to exhibit strong growth. Annual growth in employees’ average regular earnings (excluding bonuses) remains notably elevated, reported at 5.9% in the quarter to January 2025. This reflects ongoing pressures related to inflation and tight labour market conditions in certain sectors.
Real Earnings:
While nominal earnings are rising, the impact on real earnings (adjusted for inflation) is more complex. The extent to which these increases translate into real wage growth depends on the prevailing inflation rate. There is likely a small real wage increase, of 2.2%, but it is not as large as the nominal wage increase.
Payrolled Employees:
Payrolled employee numbers have shown some increases, indicating a degree of stability in the labour market. However, these increases are not uniform across all regions and sectors, with some areas experiencing more robust growth than others. Reports show increases of 0.2% over a monthly period in some areas.
Employment Rate:
The employment rate has shown some stabilization. The UK employment rate for those aged 16 and over was estimated at 75.0% in the period of Nov 2024-Jan 2025. This indicates a relatively healthy employment level, although regional disparities persist.
Unemployment Rate:
The unemployment rate has shown some increases. The UK unemployment rate (for people aged 16 and over) was estimated at 4.4% in the three months to January 2025. This rise suggests potential emerging challenges in the labour market, possibly related to economic slowdown or restructuring.
Inactivity Rate:
Economic inactivity remains a significant concern, though there are some marginal decreases reported. This indicates that a substantial portion of the working-age population is not actively seeking employment, contributing to labour shortages and potential economic constraints.
Regional Trends: Northamptonshire/East Midlands:
To provide a precise, highly localized breakdown for Northamptonshire or the wider East Midlands would require very granular data. However, generally:
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- The East Midlands, like other regions, is experiencing the national trends of fluctuating vacancy rates and wage pressures.
- There are notable impacts from the manufacturing and logistics sectors, which are prominent in that region. Therefore changes within those industries will heavily effect the East Midlands labour market.
- Reports indicate that the East Midlands has seen similar increases in unemployment rates as the national average.
Industry Sector Changes:
The most notable changes are observed in:
Wholesale and Retail Trade, and Motor Trade: These sectors are experiencing a decline in vacancies. This is likely due to economic uncertainty, and changes in consumer spending.
Service-based sectors (Accommodation and Food Services, Administrative and Support Services): Also seeing decreases in vacancies. These are labour intensive sectors, and therefore effected by increases in the cost of labour.
These changes are thought to be partly due to the effects of changes to employer National Insurance contributions (NICs) and the National Living Wage (NLW).
In conclusion, here are the general observations:
- The UK labor market is showing signs of a cautious approach from employers, likely due to economic uncertainty.
- Wage growth continues to be a key factor, with real earnings growth occurring, but at a lower rate than nominal growth.
- Youth unemployment is a growing concern.
- Economic inactivity remains a problem, despite small improvements.
- The reliability of some data, particularly the Labour Force Survey, is still a concern. Therefore, it’s crucial to look at the overall trends and consider all available data sources.
- Employers and people seeking work should keep a close eye on these trends, as they could indicate changes in the months ahead, particularly in view of the NLW and NIC changes approaching in the second quarter of 2025.
If you are a candidate or a business and would like more information., please contact us on 01604 239555 or email info@impactrecruitment.co.uk and a member of our team will be in touch.
Sources and related content: https://www.ons.gov.uk/employmentandlabourmarket/peopleinwork/employmentandemployeetypes/bulletins/uklabourmarket/march2025
