Labour Market Report – September 2025

The September 2025 Labour Market Report indicates a continued cooling of the UK labour market, primarily driven by a sustained decline in payrolled employees, rising unemployment, and a falling number of vacancies. While the overall employment rate shows a fair increase, strong nominal wage growth is also observed, highlighting persistent cost pressures.

As your local recruitment specialists, we pride ourselves on providing you with up-to-date market knowledge. Here is an overview of the latest data and what it means for you, whether you are a candidate seeking a new position or a business navigating recruitment in Northamptonshire.

What This Means for Employers

The cooling labour market presents a mixed picture for employers across the UK.

• Increased Candidate Availability: With falling payrolled employees and rising unemployment, there is generally a larger pool of candidates available. This could lead to a greater number of applicants applying for roles, potentially increasing the time taken to sort through advert responses.
• Persistent Wage Pressures (Nominal): Despite the cooling, annual nominal regular earnings growth remains strong at 4.8% (May to July 2025). This indicates that employers may still face pressure to offer competitive salaries to attract and retain talent, especially for highly skilled or in-demand roles, with public sector growth outpacing the private sector (5.6% vs 4.7%).
• Reduced Demand for New Hires: The continuous decline in vacancies, down 10,000 to 728,000, suggests a more cautious hiring environment. Employers may be prioritising internal mobility, upskilling existing staff, or operating with leaner teams to manage costs amid economic uncertainty.
• 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 can advise on realistic expectations, competitive compensation packages, and effective recruitment strategies.
• 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.
• Quality and Cultural Fit: We focus on not just matching skills but also assessing cultural fit, ensuring successful candidates align with company values. This is vital for long-term retention in a market where replacing employees can be costly.

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 the unemployment rate rising to 4.7% (May to July 2025) and a fall in vacancies, candidates are likely to face more competition for fewer available jobs. Applications will 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 (4.7% to 4.8%), the real-terms increase is more modest (e.g., 0.7% for regular pay adjusted by CPIH). This means that while pay might look good on paper, its purchasing power might not increase as much as hoped. It’s important to consider the full compensation package.
• Decreased Economic Inactivity: A decrease in economic inactivity to 21.1% 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

• 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 and in-demand skills. We can offer personalised advice on optimising your CV, improving interview techniques, and positioning yourself effectively.
• Targeted Job Matching: We take the time to understand a candidate’s skills, experience, career aspirations, and cultural fit to successfully match opportunities that genuinely align with career goals and maximise their chances of success.
• Confidentiality and Professional Representation: For candidates currently employed, we can conduct their job search discreetly. We also act as a professional intermediary, handling initial communications, negotiations, and feedback.

Change on Key Indicators:

Note on Data Quality: This report advises caution when interpreting certain Labour Force Survey (LFS) estimates due to increased volatility from improvements to the survey. We recommend consulting a variety of labour market indicators, including LFS, Workforce Jobs, and HMRC PAYE Real Time Information (RTI).

Conclusion

The September 2025 Labour Market Report reinforces the ongoing trend of a cooling labour market, 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 on the local labour market in Northamptonshire, please contact us on 01604 239555 or email info@impactrecruitment.co.uk, and a member of our team will be in touch.

Read the full report here – https://www.ons.gov.uk/employmentandlabourmarket/peopleinwork/employmentandemployeetypes/bulletins/uklabourmarket/september2025