UK unemployment rate at 4.4 percent as vacancies fall for 31st period
The UK labour market shows signs of cooling as unemployment rose to 4.4% and job vacancies recorded their 31st consecutive period of decline. The ONS continues to adjust its methodology to address volatility in survey data.
The United Kingdom labour market continues to exhibit signs of transition, according to data from the Office for National Statistics (ONS). In the period of October to December 2024, the unemployment rate for individuals aged 16 years and over was estimated at 4.4%. This figure is higher than estimates recorded one year prior and reflects an increase over the most recent quarter.
The ONS has advised that estimates derived from the Labour Force Survey (LFS) require cautious interpretation. This recommendation stems from increased volatility and sample size limitations that have affected the survey in recent periods. To bolster the reliability of these figures, the ONS increased the achieved sample size from 44,338 individuals in the October to December 2023 period to 63,069 individuals in the October to December 2024 period. Despite these enhancements, the ONS suggests that users view LFS data alongside a broader suite of indicators, including Workforce Jobs, Claimant Count data, and Pay As You Earn (PAYE) Real Time Information (RTI) statistics.
Vacancies and Workforce Participation
One of the clearest indicators of a cooling labour market is the sustained reduction in available job openings. The number of open positions in the UK fell by 9,000 on the quarter, reaching 819,000 for the period spanning November 2024 to January 2025. This downturn marks the 31st consecutive period of decline for vacancies. While the volume of vacancies remains higher than levels seen before the coronavirus pandemic, the persistent trend underscores a shift in demand for labour.
Data regarding the broader workforce shows differing movements across various categories. The economic inactivity rate for those aged 16 to 64 years was estimated at 21.5% for the October to December 2024 quarter, a figure that represents a decrease both on the quarter and on the year. Conversely, the number of individuals registered on the Claimant Count—those receiving benefits principally due to being unemployed—rose in January 2025 to 1.750 million. Furthermore, the employment rate for people aged 16 to 64 years stood at 74.9% for the October to December 2024 period.
Earnings and Real-Term Growth
Despite the cooling indicators in vacancies and recruitment, wage growth has remained a notable feature of the economic climate. Annual growth in average regular earnings, which excludes bonuses, was 5.9% for the October to December 2024 period. When including bonuses, total earnings growth reached 6.0%. When adjusting for inflation via the Consumer Prices Index including owner occupiers' housing costs (CPIH), the annual growth for both total and regular pay remained at 2.5%.
The ONS notes that these earnings figures, derived from Average Weekly Earnings (AWE) calculations, do not solely reflect pay increases. They are also influenced by shifts in the structure of the workforce, such as changes in the proportion of high-paid roles within the economy. Parallel data from the PAYE RTI system has shown similar trends, although the ONS has noted that growth in those specific measures has continued to slow.
Broader Economic Shifts
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Upcoming Statistical Changes
The statistical framework used to measure these trends is undergoing further adjustment. Users should be aware of several changes set to take effect in the near term:
- Provisional Estimates: The data released for January 2025, which indicated that payrolled employees reached 30.4 million, remains provisional and subject to revision as more information becomes available.
- Methodological Refresh: The ONS has indicated plans to refresh its reconciliation work between the LFS and Workforce Jobs datasets to better understand the divergence in trends seen between the two sources.
- Data Withdrawal: Beginning with the February 2025 publication, the ONS will remove labour market data broken down by country of birth and nationality from its official time series to address ongoing quality concerns.
As the ONS continues its efforts to improve the quality of labour market statistics, it emphasizes that annual growth rates provide a more stable view than short-term fluctuations.
