Thousands more jobs lost as UK businesses hold off hiring
Thousands more jobs have been lost across the UK, official data has shown, while wage growth also slowed down in further signs of a struggling labour market.
The Office for National Statistics (ONS) has said that the number of employees on the payroll fell by 33,000 in November while an estimate for December said there were 43,000 fewer jobs.
Fresh data points to struggles endured by workers across the UK economy, with several business surveys pointing to further declines in jobs numbers over the coming months.
“The number of employees on payroll has fallen again, with reductions over the last year concentrated in retail and hospitality, and reflecting ongoing weak hiring activity,” said Liz McKeown, director of economic statistics at the ONS.
The unemployment rate came in at 5.1 per cent, unchanged from the previous month. The unemployment rate stood at 4.4 per cent when Labour came into power in July 2024.
Vacancy numbers have been “broadly flat” over the last few months, with the three-month period showing a marginal increase after several quarters of decline.
Wage growth showed signs of slowing down.
Excluding bonuses, earnings growth in the three months to November was 4.5 per cent. Including bonuses, the reading was 4.7 per cent.
Work and pensions secretary Pat McFadden highlighted falling inactivity rates over a one-year period.
“Today’s figures show there are 513,000 more people in work compared to this time last year, but also highlights why we must go further, especially for our young people,” he said.
“That’s why are investing £1.5 billion to get hundreds of thousands of young people earning or learning, while former Health Secretary Alan Milburn is leading a review to help us get to the root of what is holding the younger generation back.
“Through our Jobs Guarantee launching this month we are helping young people find paid work placements, and we urge employers to come forward and join the likes of EON, JD Sports, Tesco and TUI who are already pledging their support.”
Shadow business secretary Andrew Griffith said the new release was a “terrible scorecard for this government”.
Bank of England interest rates warning
The new figures could rally Bank of England rate-setters hoping to lower borrowing costs at a faster pace.
Bank of England officials voted to lower interest rates to 3.75 per cent in the last meeting of 2025, with debates now taking place on how many more cuts could take place this year.
Most economists believe that cooling wage growth could prompt Monetary Policy Committee (MPC) members to back another cut in the first half of this year.
James Smith, UK economist at ING, said in a note on Monday that “rapidly” falling wage growth and rising unemployment would limit consumer spending, potentially weakening demand and letting inflation fall back to the Bank’s 2 per cent target at a faster rate.
Yael Selfin, chief economist at KPMG UK said the new set of ONS data “strengthens the case” for a gradual approach to cutting interest rates.
“While the labour market continues to weaken, the more hawkish MPC members are likely to argue that there is no immediate sign of a significant deterioration in the labour market to warrant a faster pace of cuts,” Selfin said.
“However, with the labour market likely to weaken further, it should create room for interest rate cuts in subsequent meetings.”
The ONS will publish fresh inflation numbers tomorrow morning.
Jobs to be offered to unemployed youth
McFadden attempted to get ahead of new jobs market statistics with new details on the government’s proposed youth employment guarantee.
Under the scheme for unemployed young people, 18 to 21-year-olds will receive fully subsidised paid work placements at companies including TUI, KFC, Leonardo Hotels and the Gym Group.
The initial roll-out will see more than 1,000 young people placed into jobs across England, Scotland and Wales before a national expansion.
It is part of government efforts to tackle a crisis among ‘Neets’, otherwise young people not in employment, education or training.
The announcement also precedes the publication of the Alan Milburn review into the rise of Neets and how to tackle youth inactivity, with full recommendations expected to come later this year.