New official statistics have revealed a deepening chill in the UK labour market, with tens of thousands more jobs lost and wage growth showing signs of a slowdown.
Official Figures Paint a Bleak Picture
According to the Office for National Statistics (ONS), the number of employees on company payrolls fell by 33,000 in November. An early estimate for December indicates an even sharper decline, with a further 43,000 jobs lost.
Liz McKeown, Director of Economic Statistics at the ONS, stated that the reductions over the past year have been concentrated in sectors like retail and hospitality, reflecting "ongoing weak hiring activity." The overall unemployment rate remained steady at 5.1 per cent, unchanged from the previous month but significantly higher than the 4.4 per cent recorded when the Labour government took office in July 2024.
Implications for the Economy and Interest Rates
The cooling labour market data is being closely watched by the Bank of England. Growth in regular pay, excluding bonuses, slowed to 4.5 per cent in the three months to November. Including bonuses, the figure was 4.7 per cent.
This slowdown in wage growth, coupled with rising unemployment, could provide the Bank's Monetary Policy Committee (MPC) with the evidence it needs to lower interest rates more aggressively. The MPC had already cut rates to 3.75 per cent in its final meeting of 2025.
James Smith, a UK economist at ING, noted that rapidly falling wage growth would likely limit consumer spending, potentially weakening demand and helping inflation fall back to the Bank's 2 per cent target faster.
Government Launches Youth Employment Push
Ahead of the data release, Work and Pensions Secretary Pat McFadden unveiled new details of a government scheme aimed at tackling youth unemployment. The youth employment guarantee will offer fully subsidised paid work placements to unemployed 18 to 21-year-olds at major firms including TUI, KFC, Leonardo Hotels, and The Gym Group.
The initial rollout aims to place over 1,000 young people into jobs across England, Scotland, and Wales before a national expansion. This initiative targets the crisis of 'Neets' – young people not in employment, education, or training.
The announcement precedes the publication of the Alan Milburn review into rising Neet numbers, with full recommendations expected later this year.
