The Office for National Statistics (ONS) said the number of people on payrolls dropped by 8,000 to 30.3 million in August, following a revised fall of 6,000 in July. Over the past 12 months, payrolls have contracted by 127,000.
The unemployment rate held steady at 4.7% in the three months to July, in line with forecasts, but the latest data underlines a slowdown in hiring as demand for workers continues to weaken. Vacancies fell by 10,000 to 728,000, extending a run of 38 consecutive months of declining job openings.
Pay growth also softened. Average weekly earnings excluding bonuses grew by 4.8%, down from 5%, while pay including bonuses rose 4.7%. Economists and the Bank of England track wage data closely as a key driver of inflation.
The figures come ahead of the Bank of England’s latest policy meeting this week. Rates are expected to remain unchanged at 4% after being cut in August — the fifth reduction in a year. Market pricing suggests they could stay on hold for the rest of 2025, with policymakers signalling they are prioritising the fight against inflation despite evidence of a cooling jobs market.
Inflation data due on Wednesday is forecast to show annual price growth of between 3.8% and 3.9% in August, nearly double the Bank’s 2% target.
Liz McKeown, ONS director of economic statistics, said: “The labour market continues to cool, with the number of people on payroll falling again, while firms also told us there were fewer jobs in the latest period.”
The combination of weaker hiring, falling vacancies and moderating pay growth will add to concerns that the post-pandemic jobs boom has definitively run its course, with sectors from retail to construction reporting sharp slowdowns in demand for workers.
Jamie Young
Jamie Young is Senior Reporter at Business Matters, covering SME finance, employment law and Westminster policy since 2016. He has reported on every Budget and Autumn Statement since 2018, helped make sense of the 'covid era' and the bounce-back loan scheme from launch through the fraud investigations, and broke the magazine's coverage of the 2024 late-payment reforms. He joined Business Matters straight from completing his BA in Administration from Exeter University and is NCTJ-qualified. Reach him at jyoung@cbmeg.co.uk
