17 February 2026
If you are covering the latest UK employment data, please find below a comment from Jonathan Raymond, investment manager at Quilter Cheviot:
“Continuing the recent trend, the UK labour market slowed once again as it ended 2025 with a lull, is showing signs of creaking at a time when economic growth is difficult to come by. The data from ONS shows the number of payrolled employees in the UK fell by 121,000 in December compared to the same month in 2024. The final quarter of the year saw a drop of 130,000 over the year, with a fall of 46,000 quarter on quarter. January’s initial estimates do not fare much better, though the pace of the declines does appear to be slowing month on month. The unemployment rate now stands at 5.2%, climbing from 5.1% at the previous reading.
“Following a November where hiring plans were put on hold due to the budget, things are yet to get going again, potentially highlighting the longer-term impacts of increases costs that businesses have faced. Increased minimum wage costs, national insurance contributions, business rates and concerns around the impact of the Employment Rights Act continues to show up in the data and appears to be putting a weight on the economy. Economic indicators were beginning to shine some positivity but that has arguably been wiped by this latest data.
“Wage growth data shows that earnings are increasing by 4.2%, with public sector workers continuing to see much higher pay rewards than the private sector. Wage growth has been a scourge for the Bank of England in recent years and it would probably like to see that figure come down further to guarantee a downward trajectory for interest rates.
“Having held rates where they were at the first meeting of the year, calls are growing louder for the Bank of England to reduce rates at its next meeting in March. Inflation is expected to fall considerably in the coming months and as such focus from the BoE will be more on the labour market. With economic growth languishing at the end of 2025, the recipe is there for a rate cut to be delivered. However, without an uptick in consumer or business confidence, growth is likely to continue to be found wanting and the jobs market may remain uncertain for a while longer.”
