UK labor market continued to soften in July, with early payroll estimates showing employee numbers falling by -13,000 from June and by -94,000 from a year earlier. June’s monthly decline was also revised from -4,000 to -13,000, reinforcing gradual downtrend from 2024 peak.
ILO unemployment rate held at 4.9% in three months to June, slightly above 4.8% expected, although claimant count moved in opposite direction with an -11,000 decline versus expectations for a 16,500 increase.
Wage data were mixed. Regular earnings growth edged up from 3.4% to 3.5% y/y in April-June, above 3.4% consensus Total earnings growth slowed from 4.3% to 4.1%, matching expectations.
More timely payroll-based median pay growth also eased from 4.5% to 4.2% y/y in July, suggesting underlying wage momentum is gradually cooling despite firmness in regular pay.
Overall, employment conditions are weakening more clearly than wages. Payrolls continue to drift lower and unemployment remains elevated, but pay growth is proving slower to soften.
Data Summary
| Indicator | Actual | Expected | Previous |
|---|---|---|---|
| Payrolled Employees m/m, Jul | -13K | — | -13K* |
| Payrolled Employees y/y, Jul | -94K | — | — |
| Payrolled Employees y/y, Jul | -0.3% | — | — |
| Payrolled Employees Level, Jul | 30.3M | — | — |
| ILO Unemployment Rate, 3M to Jun | 4.9% | 4.8% | 4.9% |
| Claimant Count Change, Jul | -11.0K | +16.5K | +6.7K |
| Average Earnings ex Bonus, 3M y/y Jun | 3.5% | 3.4% | 3.4% |
| Average Earnings incl Bonus, 3M y/y Jun | 4.1% | 4.1% | 4.3% |
| Median Monthly Pay y/y, Jul | 4.2% | — | 4.5% |
*June payroll decline was revised from -4K to -13K.
Key Takeaways
- UK payrolled employment fell another 13K in July, while June was revised to show the same decline, reinforcing gradual weakening from 2024 peak.
- Payrolls were 94K lower than a year earlier, equivalent to a 0.3% annual decline.
- ILO unemployment rate held at 4.9%, slightly above 4.8% consensus.
- Claimant count provided main positive surprise, falling 11K instead of expected 16.5K increase.
- Wage signals were mixed. Regular earnings growth firmed from 3.4% to 3.5%, while total earnings slowed from 4.3% to 4.1%.
- More timely median payroll pay growth eased from 4.5% to 4.2% in July.
- Overall picture is one of employment weakening faster than wages, with payrolls drifting lower but pay growth cooling only gradually.
