PwC comments on July 2025 ONS labour market data

Commenting on the latest ONS labour market data for July 2025, Paige Tao, economist at PwC UK, said:

“Today’s data continues to show cooling in the labour market. The unemployment rate nudged up to 4.7%, while annual wage growth excluding bonuses eased to 5.0%, marking the third consecutive monthly decline. Payrolled employment fell by 41,000 and vacancies declined further for the 36th straight month, with quarterly falls recorded in 14 out of 18 industry sectors. This highlights employers’ continuous efforts to contain labour costs amid both domestic tax pressures and global turbulence. 

“Following yesterday’s upside CPI surprise, this softening in pay growth is critical for a Bank of England closely watching this final key data release ahead of the August MPC meeting. Governor Andrew Bailey recently said the Bank was watching for signs of ‘slack opening up much more quickly’, and today’s figures suggest that shift may be underway. With GDP shrinking for two consecutive months and services inflation flat in June, the case for an August rate cut is certainly in place. The question now is, how much further will the labour market slide and could it prompt the Bank to accelerate its pace of easing?”