Commenting on the latest ONS labour market data for September 2025, Barret Kupelian, Chief Economist at PwC UK, said:
“Labour-market heat is coming off: unemployment is around 4.7%, and total pay is rising at its slowest pace since late 2021. After inflation, real earnings are edging up by roughly half a percentage point, down from about 2.6% at the end of last year. The hinge for growth now is whether households spend or keep saving; recent data suggest household savings remain elevated relative to pre-pandemic norms, which could continue to temper the biggest driver of demand in the economy.
“The brighter spot is supply: economic inactivity is about one percentage point below its late-2023 peak. If that improvement continues, it should be a supply side easing, easing pay pressures and helping the economy adjust without a hard stop. Overall, the thermostat is turning down on pay, while rising participation provides a welcome tailwind.”
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