UK Jobs Market: A detailed look at the latest numbers (February 2025)
The latest Labour Market Report for February 2025 has arrived, and it continues to present a complex picture, with some encouraging signs mixed with potential worries. The report suggests some good news on wages, but also some worrying signs about job security. Let’s break down the latest data to understand what’s happening in plain terms.
Trends and Considerations: An Overview
The report highlights that getting a completely accurate picture of the jobs market is currently complex. Some of the surveys used to collect the data aren’t as reliable as they used to be, mainly because fewer people are responding. This means we must be a bit cautious when interpreting the numbers.*
However, we can confidently report small fluctuations:
- Payrolled employees decreased by 14,000 (0.0%) between November and December 2024 but rose by 44,000 (0.1%) over the year (Dec 23- Dec 24).
- Looking at the quarter (October to December 2024), payrolled employees fell by 3,000 (0.0%), but increased by 106,000 (0.3%) over the year.
- Early estimates for January 2025 show a slight increase of 21,000 (0.1%) on the month, and 49,000 (0.2%) on the year, reaching 30.4 million. However, these are provisional and subject to potential change.
What this means: The jobs market isn’t seeing big swings, but rather a slow and steady, albeit somewhat bumpy, movement. It is important to remember that the January figures are not yet fully confirmed, so we should view them with caution.
*Different Data Sources: The report uses various sources, like surveys of households (Labour Force Survey or LFS), businesses (Workforce Jobs or WFJ), and tax records (PAYE RTI). Each source tells a slightly different story, so it’s important to look at them all together.
*Data Volatility: The LFS data is particularly volatile now, so changes in those numbers should be treated with care. Other sources, like the PAYE RTI, are currently providing more stable readings.
Latest Data: Employment, Unemployment and Earnings
- Employment: The employment rate (the percentage of people aged 16-64 who are working) is at 74.9%. This is a positive sign, indicating that more people (albeit marginally) are in work than a year ago.
- Unemployment: Unfortunately, the unemployment rate (the percentage of people looking for work, but unable to find it) has also risen to 4.4%. This suggests that while more people are working, it’s getting harder for others to find jobs.
- Earnings: The good news is that wages are rising. Average regular earnings (excluding bonuses) increased by 5.9% in the year to October-December 2024. When adjusted for inflation (the rising cost of living), real earnings (what your money actually buys) increased by 2.5%. This means that, on average, people’s pay packets are now going further.
- Payrolled Employees: There have been some small fluctuations in the number of people on company payrolls. While there was a slight decrease between November and December 2024, the overall trend has been a small increase across the year. The early estimate for January 2025 shows a slight increase of 0.1%.
Key Indicators at a Glance
Here’s a quick summary of the key indicators:
- Job Vacancies: The number of job openings is falling, down to 819,000 (a decrease of 9,000 on the quarter). This suggests that employers are becoming more cautious about hiring.
- Nominal Earnings: Average earnings before inflation are up by 5.9% (excluding bonuses) and 6.0% (including bonuses).
- Real Earnings: Average earnings after inflation are up by 2.5%.
- Payrolled Employees: Showing slight fluctuations, with a small overall increase (by 21,000 employees- 0.1%).
- Employment Rate: 74.9% (up by 0.1% on the quarter).
- Unemployment Rate: 4.4% (up on the quarter).
- Inactivity Rate: 21.5% (down). This is the percentage of people aged 16-64 who are neither working nor looking for work. Incidentally, this is still above pre-pandemic rates and hopefully means more people are re-entering the workforce.
Conclusion
The UK jobs market is presenting a mixed picture. On one hand, average wages are increasing, (when you take inflation into account, 2.5% real terms growth) and more people are in employment. This is good news for people’s spending power. On the other hand, unemployment is on the rise, and job vacancies are decreasing for the 31st consecutive month. This suggests a continued slowdown in hiring and increased competition for jobs. However, all fluctuations are marginal.
The reliability of some data, particularly the Labour Force Survey, is 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.
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.
