15 April 2025
If you are covering the latest UK labour market statistics, please see the following comment from Lindsay James, investment strategist at Quilter:
“The ONS’s labour force survey has come under increasing scrutiny of late, and it’s worth bearing in mind that the concerns around the accuracy of the data makes these labour market updates considerably less trustworthy than in previous cycles. However, and unfortunately for policy makers and the Bank of England, for now there is no alternative, so it will have to be accepted as a ‘best guess’.
“This morning’s print shows the UK jobs market is still chugging along for now, but a slowdown is expected. The unemployment rate held steady at 4.4% in December 2024 to February 2025, while payrolled employee numbers decreased by 8,000 between January and February 2025 but were up by 35,000 between February 2024 and February 2025. Job vacancies also lowered, falling by 26,000 in January to March 2025 and marking the 33rd consecutive quarterly decline.
“With the changes to national insurance now in place and tariff volatility beginning to hit, today’s snapshot of the jobs market could well be the last solid report for a while. Indeed, the early estimate of payrolled employees for March 2025 dropped by 78,000 on the month and by 70,000 on the year, but these figures should be taken with a pinch of salt and are likely to be revised.
“Inflation is expected to increase further as the year progresses and continued high wage growth is only adding fuel to the fire. Inflation came in at 2.8% in the 12 months to February, but today’s figures show regular pay, excluding bonuses, held at 5.9% between December 2024 and February 2025, while total pay, including bonuses, lowered only slightly to 5.6% from 5.8%. This leaves wage growth at more than double the rate of inflation, with earlier data showing productivity growth remains at a near standstill.
“The UK GDP data out on Friday was somewhat reassuring, supported by signs that the service economy continues to grow, with recent surveys pointing to an uptick in activity. However, the economy faces significant risks and while the UK has avoided a recession thus far, it is not yet out of the woods.
“The same surveys have also shown that the outlook for employment remains a weak spot. Rising payroll costs are making job creation increasingly less attractive for employers, particularly as the changes to employer national insurance have now come into play, and the extreme levels of economic uncertainty we are currently facing are also leading to companies holding off on hiring.
“Additional tax rises in the autumn seem increasingly likely, and the near doubling of GDP forecasted by the OBR for 2026 before ‘Liberation Day’ has fast become a significant challenge in light of a potential slowdown in global trade. With the full economic impact of Trump’s tariffs yet to play out, employers will be even less likely to commit to expansion plans.”
