As your local recruitment specialist, we pride ourselves on providing you with up to date market knowledge. Whether you are a candidate seeking a new position or a business navigating recruitment, here is an overview of the latest data and what it means for you.
The August 2025 Labour Market Report indicates a continued cooling of the labour market, primarily driven by a continued decline in payrolled employees, rising unemployment, and falling number of vacancies. While the overall employment rate shows a fair increase, strong nominal wage growth is also observed.
What This Means for Employers:
The cooling labour market presents a mixed picture for employers across the UK, including those in Northampton.
- Increased Candidate Availability: With falling payrolled employees and rising unemployment, there is generally a larger pool of candidates available for open positions. This could lead to a greater number of applicants applying for roles, increasing the time taken to sort through advert responses.
- Persistent Wage Pressures (Nominal): Despite the cooling, nominal wage growth remains relatively strong at 5.0%. This indicates that while the market is softening, employers may still face pressure to offer competitive salaries to attract and retain talent, especially for highly skilled or in-demand roles.
- Reduced Demand for New Hires: The continuous decline in vacancies, coupled with feedback that some firms are not recruiting or replacing leavers, suggests a more cautious hiring environment. Employers may be prioritising internal mobility, upskilling existing staff, or simply operating with leaner teams to manage costs amid economic uncertainty and rising employer contributions (e.g., National Insurance, National Living Wage).
- Focus on Retention and Efficiency: In this environment, retaining key talent becomes even more crucial. Employers may shift focus from aggressive external hiring to nurturing their current workforce through development, engagement, and effective succession planning to avoid the costs and disruptions associated with turnover.
How We Can Help Employers:
- Access to a Wider Talent Pool: Partnering with us can significantly broaden your reach beyond traditional job boards, especially when the overall pool of actively searching candidates is larger. We have extensive databases of pre-vetted candidates, including those who may not be actively seeking new roles.
- Market Insight and Expertise: Our recruitment specialists possess real-time knowledge of market trends, salary benchmarks, and candidate availability within a variety of sectors across Northamptonshire. We are able to advise on realistic expectations, competitive compensation packages, and effective recruitment strategies to attract the best fit for your team.
- Time and Cost Efficiency: By handling the end-to-end recruitment process—from sourcing and screening to initial interviews and offer management—our partnership will free up valuable internal resources for your business. This can reduce the overall time-to-hire and potentially lower recruitment costs by avoiding lengthy, unproductive hiring cycles.
- Quality and Cultural Fit: Impact focuses on not just matching skills but also assessing cultural fit, ensuring successful candidates align with company values and the company environment. Additionally, as third-party experts, we provide an objective assessment of candidates, helping to mitigate unconscious bias and ensure a fair and merit-based hiring process. This is vital for long-term retention in a market where replacing employees can be costly.
- Flexibility and Strategic Staffing: For businesses looking for agility, we offer tailored recruitment solutions to solve your needs. Whether the need is to retain a candidate for long-term stability with permanent solutions or to manage fluctuating workloads and skill gaps through temporary hires, we can help!
What This Means for Candidates:
For job seekers in Northampton and across the UK, the current labour market trends suggest an evolving landscape:
- Increased Competition for Roles: With rising unemployment and falling vacancies, candidates are likely to face more competition for fewer available jobs. This means applications may need to stand out more, and job searches could take longer.
- Importance of Skills and Experience: Employers are becoming more selective. Candidates with in-demand skills, relevant experience, and a clear demonstration of their value will have a significant advantage. Continuous upskilling and professional development can enhance your marketability.
- Wage Growth Nuances: While nominal wage growth remains strong, the real-terms increase is more modest. This means that while pay might look good on paper, its purchasing power might not increase as much as hoped, or it might just be keeping pace with inflation. It’s important to consider the full compensation package.
- Opportunity in Returning to Work: A decrease in economic inactivity means more people are joining or re-joining the workforce. This intensifies competition for jobs, especially in entry-level or less specialised fields, making it crucial for candidates to differentiate themselves.
- Proactive Job Search is Key: Waiting for opportunities to appear may not be as effective. A proactive approach, including networking, direct applications, and leveraging professional contacts, will be more beneficial.
How We Can Help Candidates:
As a recruitment agency, we are uniquely positioned to assist candidates in navigating this challenging yet opportunity-filled market:
- Access to Unadvertised Roles: Many companies work exclusively with us to fill positions, meaning we have access to a variety of roles that are never publicly advertised. This gives our candidates an exclusive advantage.
- Market Insights and Expert Guidance: Our consultants possess up-to-date knowledge of the local labour market, including salary trends, in-demand skills, and industry-specific insights. We can offer personalised advice on optimising your CV, improving interview techniques, and positioning yourself effectively.
- Targeted Job Matching: We don’t just send generic job listings. We take the time to understand a candidate’s skills, experience, career aspirations, and cultural fit to successfully match opportunities that genuinely align with candidate goals and maximise their chances of success.
- Application and Interview Preparation: We provide tailored support, from refining CVs and cover letters to tailored interview preparation, including insights into company culture and interview style. We can help highlight strengths and effectively address any potential gaps.
- Confidentiality and Professional Representation: For candidates currently employed, we can conduct their job search discreetly, ensuring their current employer is unaware until the appropriate time. We also act as a professional intermediary, handling initial communications, negotiations, and feedback.
- Long-Term Career Partnership: Our relationship doesn’t end when the role is secured. We aim to be a long-term career partner, offering advice and support as their career develops, helping identify future opportunities and growth paths.
Key Trends:
This report advises caution when interpreting certain labour market data, particularly Labour Force Survey (LFS) estimates from mid-2023 through 2024, due to increased instability. It is recommended to consult a variety of labour market indicators, including the LFS, Workforce Jobs, and HM Revenue and Customs (HMRC) PAYE Real Time Information (RTI), as each source measures distinct aspects of the labour market and may provide diverging insights.
Employment and Payroll
- Decreasing Payrolls: The number of payrolled employees in the UK continues to decline. Estimates show a decrease of roughly 150,000 payrolled employees over the last year. These early figures are provisional and subject to significant revision.
- Overall Employment Rate Up: Although the number of employees on payrolls has fallen, the UK’s overall employment rate has increased. This is because different surveys measure employment in different ways. For example, one survey shows a drop in paid employees, while another, the Labour Force Survey (LFS), shows that 725,000 more people were employed over the last year.
- Workforce Jobs: (Workforce Jobs data for June 2025 will be published in September 2025, so no new data is provided in this report).
Unemployment and Inactivity
- Rising Unemployment: The number of people unemployed in the UK went up to 4.7% between April and June 2025. This is higher than it was last year and also higher than the previous three months.
- The number of people claiming unemployment benefits dropped: The number of people claiming unemployment benefits in the UK fell and is lower than last month and the same time last year.
- Decreasing Economic Inactivity: The number of people aged 16-64 in the UK who are not in work or looking for work went down to 21.0% between April and June 2025. This suggests more people are either looking for work or are in work compared to this same time last year and the last three months.
Vacancies and Earnings
- Continued Decline in Vacancies: The number of job openings in the UK has dropped again. Between May and July 2025, there were 44,000 fewer jobs available, bringing the total to 718,000. This is the 37th quarter in a row that vacancies have fallen. Most industries are hiring less, as some companies are choosing not to hire new staff or replace people who have left.
- Strong Wage Growth (Nominal): Between April and June 2025, average pay for workers in Great Britain grew. Workers in the public sector saw bigger pay rises.
- Real Terms Wage Growth: After accounting for inflation, the actual value of pay rose slightly between April and June 2025.
- Regular pay: (without bonuses) was worth 0.9% more when considering all costs, or 1.5% more when just looking at the Consumer Price Index.
- Total pay: (with bonuses) was worth 0.5% more (including housing costs) or 1.1% more (excluding housing costs).
- Working Days Lost: Approximately 38,000 working days were lost due to labour disputes across the UK in June 2025.
Conclusion
The August 2025 Labour Market Report reinforces the ongoing trend of a cooling labour market. This is evidenced by continued falls in payrolled employees, rising unemployment, and a continued decline in vacancies. While the employment rate shows a modest increase and nominal wage growth remains robust, challenges persist. Both employers and candidates must adapt their strategies to leverage increased candidate availability (for employers) and manage increased competition (for candidates), while navigating wage expectations and focusing on retention and skill development. Impact Recruitment is well-equipped to assist in navigating these complexities, providing expertise, efficiency, and access to quality talent and opportunities.
If you are a candidate or a business and would like more information, please get in touch.
Call 01604 239555 or email info@impactrecruitment.co.uk, and a member of our team will be in touch.
Read the full report – https://www.ons.gov.uk/employmentandlabourmarket/peopleinwork/employmentandemployeetypes/bulletins/uklabourmarket/august2025#data-sources-and-quality
