Ministers were so convinced that official figures would show an improvement in the jobs market that Pat McFadden sent out a pre-prepared statement hailing “a continued fall in [the] unemployment rate”.
Unfortunately for the Work and Pension Secretary, the data didn’t play ball – rather than dropping to 4.8pc in the three months to June as had been expected, the unemployment rate remained stubbornly stuck at 4.9pc.
That may not sound so bad – flat is better than a rise in joblessness after all – but beneath the headline figures there are worrying signs that the jobs market is going in the wrong direction.
Julian Jessop, economics fellow at the Institute of Economic Affairs, said the latest labour market statistics were “dire”.
While the three month average was flat, the monthly figures tell a different story. They show unemployment rose sharply from 4.6pc in May to to 5.4pc in June.
That was the largest monthly jump in 13 years and took the rate to its highest level since October 2020, when Britain was in the midst of the pandemic.
James Smith, an economist at ING, said: “Consumer-facing industries – hospitality and retail – have been consistently shedding jobs and if anything, the pace of decline is getting worse.”
The sharp increase in monthly unemployment comes as rising costs triggered by the Iran war energy price shock prompt more bosses to let staff go.
The nation’s construction sector has also been reducing staffing numbers as builders report falling activity and a decline in demand for new work.
Business activity in Britain’s building industry has been in decline since January 2025, according to the S&P Global Purchasing Managers’ Index.
The Office for National Statistics (ONS) figures show the private sector has weakened significantly since the start of the year, with an increase in the number of public sector workers masking the problem.
Overall payrolled employment declined by 13,000 in July. But this monthly figure masks broader shifts.
Worryingly, the private sector has recorded a 110,000 drop in the number of payrolled employees since the start of the year, or a 0.5pc decline.
By contract, the public sector has expanded by 42,000 workers over the same period, or 0.4pc since January.
Martin Beck, chief economist at WPI Strategy, said: “Beneath the headline figures, the divide between the public and private sectors remained stark, with the public sector continuing to provide much of the support to employment and pay growth.”
Unlike many private businesses, Britain’s civil servants have struggled with low productivity since the pandemic.
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