12 August 2025
If you are covering the latest Earnings and Employment data, please see the following comment from Richard Carter, head of fixed interest research at Quilter Cheviot:
"Today’s ONS earnings and employment data for July 2025 shows the UK economy losing momentum. Early estimates indicate that the number of payrolled employees was 30.3 million, down 0.5% from July 2024, equivalent to 164,000 fewer employees. The largest increase was in the health and social work sector, which added 67,000 employees, while the accommodation and food service activities sector saw the largest decrease with a fall of 108,000 employees.
On a monthly basis, payrolled employment decreased by 8,000 in July compared with June, with the figures for July treated as provisional and likely to be revised. The June 2025 monthly fall has been revised from a decrease of 41,000 to a smaller drop of 26,000 as more real-time information has been incorporated. Median monthly pay increased by 5.7% compared with July 2024, with annual pay growth strongest in public administration and defence at 8.6%, and weakest in the professional, scientific and technical sector at 4.0%.
These figures land just days after the Bank of England cut interest rates from 4.25% to 4.0% in a knife-edge five to four vote. The decision required a rare second vote, highlighting divisions within the MPC. However, Governor Andrew Bailey has made clear the path for rates remains downwards, signalling a priority to support growth and jobs despite the messy vote.
Hiring conditions have been softening for months in the wake of employer National Insurance changes and a cooling economy. Recruiters report falling vacancies, more candidates chasing fewer roles, and wage pressures beginning to ease. Given today’s weak employment numbers, the case for another rate cut before the end of the year is now even stronger.
The Bank faces a fine balancing act. Inflation remains at 3.6%, fuelled by housing and transport costs, but signs of slack in the labour market are becoming harder to ignore. With the MPC split on the pace of easing, these latest numbers could tip the balance towards further cuts to shore up the economy."
