April 2025 UK Jobs Report: All Getting Rather Ugly

Unemployment rose to 4.6% in the three months to April, its highest level since mid-2021, though the usual caveats around the ongoing unreliability of the Labour Force Survey must continue to be borne in mind here.

Average earnings, meanwhile, continue to increase at a pace incompatible with the BoE’s 2% inflation aim, though did print a touch softer than expected, despite April figures having been skewed higher by a near-7% rise in the national living wage, coupled with payback from an unusually soft March figure. Overall pay rose 5.3% YoY, while regular pay rose 5.2% YoY, with the prior prints revised lower in each case as well.

The more timely HMRC indicator of payrolled employment, lastly, pointed to employment falling by 109,000 in the month of May, the largest such decline since the pandemic, compounded by a downward revision to the prior print as well.

On the whole, this morning’s data once again paints a picture of a gradually weakening employment backdrop, with an increasing margin of slack continuing to develop. This is particularly concerning given the numerous downside risks which remain, and considering that the full impact of April’s National Insurance hike has yet to be seen.

While the figures shan’t alter the near-term BoE policy outlook, with the ‘Old Lady’ set to hold rates steady next week, before delivering a 25bp cut at the August meeting, this slack will likely give increasing confidence that the summer ‘hump’ in inflation is indeed likely to prove temporary in nature, likely unlocking a more rapid pace of easing once summer is out, as focus shifts to supporting ailing economic growth.