London Daily

Focus on the big picture.
Friday, Jul 04, 2025

UK jobs leap as economy bounces back, pay jumps too

UK jobs leap as economy bounces back, pay jumps too

The number of employees on British company payrolls surged in June by the most since the start of the coronavirus pandemic, according to data which painted a picture of a roaring jobs market and growing inflationary pressure from rising wages.

A day after a top Bank of England official said the time for the BoE to think about taking action on inflation might be approaching sooner than he had expected, tax data showed a 356,000 leap in employment in June from May.

The increase was driven by 94,000 more accommodation and food jobs, which were hit by lockdowns that have now been largely lifted, and a 72,000 rise in jobs in administration and support services, including temporary staff at recruitment agencies.

The headline unemployment rate for the three months to May stood at 4.8%, the Office for National Statistics said. Economists polled by Reuters had mostly expected it to hold at 4.7% seen in the three months to April.

But the ONS said the population estimates used to calculate the unemployment rate had changed and the figure for the three months to April would have been 4.8% under the new system.

Britain's labour market has been propped up by finance minister Rishi Sunak's job subsidies which paid the wages on 8.9 million jobs at its peak in May 2020, during the first COVID-19 lockdown, and supported 2.4 million jobs at the end of May 2021.

The scheme is being phased out by the end of September which could push unemployment back up.

"We anticipate the unemployment rate to rise to around 5.5% in winter this year as the furlough scheme ends, with around one in 10 furloughed workers potentially unable to return to their original job," Yael Selfin, chief economist at KPMG UK, said.

RECORD GROWTH IN PAY AND VACANCIES


Thursday's figures showed the fastest headline wage growth in the year to May since records began in 2000, although the comparisons have been skewed by greater job losses among low-paid workers and comparison with depressed wages a year ago.

Average weekly earnings in the three months to the end of May rose by 7.3% compared with a year earlier.

The ONS estimated underlying wage growth, excluding distortions caused by the pandemic, was between 3.9% and 5.1% for average weekly earnings. For average earnings excluding bonuses it was between 3.2% and 4.4%.

The pick-up in hiring and in pay added to signs of how fast Britain's economy is bouncing back from its nearly 10% crash last year when it was hit by one of the world's heaviest COVID death tolls and long lockdowns.

The number of job vacancies in the three months to June rose by 241,000 to 862,000, the biggest quarterly increase since records began in 2001 and just short of the record-high total number of vacancies seen in late 2018.

BoE Deputy Governor Dave Ramsden said on Wednesday that the conditions set by the central bank for any tightening of monetary policy might be approaching.

Data earlier that day showed inflation hit 2.5% in May due to higher oil prices and bottlenecks as the economy reopened - a sharper rise than the BoE had been forecasting.

Ramsden said British inflation might rise as high as 4% "for a period later this year" - double the BoE's target - and the factors driving it up might take some time to ease off.

On Thursday, financial markets were pricing in a first rise in BoE interest rates to 0.25% by August 2022, little changed from Wednesday.

Ruth Gregory, an economist with Capital Economics, said the labour market was well on its way to recovery but revisions to past figures, including lower employment than previously reported, suggested it could still absorb inflation pressure.

"While there is growing evidence that firms are finding it more difficult to hire workers, we suspect that most of these labour shortages will prove temporary and that they will be confined to a few sectors," she said.

Newsletter

Related Articles

0:00
0:00
Close
DJI Launches Heavy-Duty Coaxial Quadcopter with 80 kg Lift Capacity
U.S. Senate Approves Major Legislation Dubbed the 'Big Beautiful Bill'
Largest Healthcare Fraud Takedown in U.S. History Announced by DOJ
Poland Implements Border Checks Amid Growing Migration Tensions
Political Dispute Escalates Between Trump and Musk
Emirates Airline Expands Market Share with New $20 Million Campaign
Amazon Reaches Milestone with Deployment of One Millionth Robot
US Senate Votes to Remove AI Regulation Moratorium from Domestic Policy Bill
Yulia Putintseva Calls for Spectator Ejection at Wimbledon Over Safety Concerns
Jury Deliberations in Diddy Trial Yield Partial Verdict in Serious Criminal Charges
House Oversight Committee Subpoenas Former Jill Biden Aide Amid Investigation into Alleged Concealment of President Biden's Cognitive Health
King Charles Plans Significant Role for Prince Harry in Coronation
Two Chinese Nationals Arrested for Espionage Activities Against U.S. Navy
Amazon Reaches Major Automation Milestone with Over One Million Robots
Extreme Heat Wave Sweeps Across Europe, Hitting Record Temperatures
Meta Announces Formation of Ambitious AI Unit, Meta Superintelligence Labs
Robots Compete in Football Tournament in China Amid Injuries
Trump Administration Considers Withdrawal of Funding for Hospitals Providing Gender Treatment to Minors
Texas Enacts Law Allowing Gold and Silver Transactions
China Unveils Miniature Insect-Like Surveillance Drone
OpenAI Secures Multimillion-Dollar AI Contracts with Pentagon, India, and Grab
Marc Marquez Claims Victory at Dutch Grand Prix Amidst Family Misfortune
Germany Votes to Suspend Family Reunification for Asylum Seekers
Elon Musk Critiques Senate Budget Proposal Over Job Losses and Strategic Risks
Los Angeles Riots ended with Federal Investigations into Funding
Budapest Pride Parade Draws 200,000 Participants Amid Government Ban
Southern Europe Experiences Extreme Heat
Xiaomi's YU7 SUV Launch Garners Record Pre-Orders Amid Market Challenges
Jeff Bezos and Lauren Sanchez's Lavish Wedding in Venice
Russia Launches Largest Air Assault on Ukraine Since Invasion
Education Secretary Announces Overhaul of Complaints System Amid Rising Parental Grievances
Massive Anti-Government Protests Erupt in Belgrade
Trump Ends Trade Talks with Canada Over Digital Services Tax
UK Government Softens Welfare Reform Plans Amid Labour Party Rebellion
Labour Faces Rebellion Over Disability Benefit Reforms Ahead of Key Vote
Jeff Bezos and Lauren Sánchez Host Lavish Wedding in Venice Amid Protests
Trump Asserts Readiness for Further Strikes on Iran Amid Nuclear Tensions
North Korea to Open New Beach Resort to Boost Tourism Economy
UK Labour Party Faces Internal Tensions Over Welfare Reforms
Andrew Cuomo Hints at Potential November Comeback Amid Democratic Primary Results
Curtis Sliwa Champions His Vision for New York City Amid Rising Crime Concerns
Federal Reserve Proposes Changes to Capital Rule Affecting Major Banks
EU TO HUNGARY: LET THEM PRIDE OR PREP FOR SHADE. ORBÁN TO EU: STAY IN YOUR LANE AND FIX YOUR OWN MESS.
Trump Escalates Criticism of Media Over Iran Strike Coverage
Trump Announces Upcoming US-Iran Meeting Amid Controversial Airstrikes
Trump Moves to Reshape Middle East Following Israel-Iran Conflict
Big Four Accounting Firms Fined in Exam Cheating Scandal
NATO Members Agree to 5% Defense Spending Target by 2035
Australia's Star Casino Secures $195 Million Rescue Package Amid Challenges
UK to Enhance Nuclear Capabilities with Acquisition of F-35A Fighter Jets
×