What the latest ONS figures mean for the UK Labour Market June 2025

What the latest ONS figures mean for employers and job seekers

The Office for National Statistics has released its June 2025 labour market overview, and the headlines are hard to miss.

Unemployment has inched up to 4.6%, vacancies have slipped again to 736,000, and pay growth is still outpacing inflation at 5.2% a year.

If you follow economic commentary you will hear that the market is “easing”.

For anyone who makes hiring decisions or is looking for their next role, that phrase can sound abstract or even worrying.

Below is a plain-English tour of the numbers, why economists use the word easing, and what it all means in practice.

The UK Labour Market June 2025 scoreboard in simple terms

Those figures paint a picture of a market moving away from the white-hot conditions of the past two years but still healthier than many long-term averages.

Why economists say the market is easing

Picture a game of musical chairs.

For much of 2022 and 2023 there were more chairs than players.

Anyone who wanted a seat could find one quickly and at increasingly attractive pay.

That situation is described as a tight labour market.

Now some chairs have been removed because employers are advertising fewer vacancies, and a few extra players are on their feet because unemployment has ticked up.

There are still plenty of chairs and most players are seated, but the scramble has become a bit less frantic.

Moving from very tight conditions toward a closer balance between jobs and job-seekers is what economists call easing.

Importantly, easing is not the same as collapsing.

Is an easing market bad news?

Not necessarily. Context matters as much as direction.

• Levels remain favourable. Even after recent changes, an unemployment rate just under 5% is low by historic and international standards. During much of the last decade the UK rate sat near 7%.

• Pay is still beating inflation. Regular wages are rising about 1.5% faster than the Consumer Prices Index including owner occupiers’ housing costs. Living standards on average are edging higher again.

• Vacancies are above pre-pandemic norms. Today’s 700,000+ advertised openings are fewer than last year but still more than before Covid.

So while the market is shifting, it is not falling off a cliff.

Instead, power between employers and workers is starting to rebalance.

What is driving the shift?

Several forces are working together:

1. Interest-rate story. The Bank of England has kept borrowing costs high to tame inflation. Higher rates curb consumer demand and cool business expansion, so fewer new roles are created.

2. Post-pandemic re-entry. Some people who left the workforce because of health issues or caring responsibilities are returning as savings run down or support improves, adding candidates.

3. Cautious hiring. After paying top dollar to secure talent in 2022, many firms have pressed pause, replacing departures but delaying brand-new positions.

Sector snapshots

• Professional services and tech. These areas saw the sharpest earlier rises in pay and headcount, so they are also seeing a sharper slowdown in vacancy growth.

• Engineering and energy. Skilled technical roles remain hard to fill, and pay offers are holding up.

• Hospitality and retail. Openings are still above their long-term trend but wage growth is moderating as more applicants arrive.

Different regions feel the change at different speeds.

London and the South East still carry the highest vacancy densities, but northern cities are seeing a gentler retreat from peak demand.

What it means for employers

More choice, slightly less urgency

With fewer companies chasing the same talent, hiring teams can take a breath.

That does not mean moving slowly, but it does allow a more thorough shortlist process without fear that every good candidate will vanish tomorrow.

Pay pressures are cooling but have not disappeared

Average advertised salaries for in-demand skills are not shooting up like last year, yet hard-to-source expertise still commands a premium.

Benchmarks must be reviewed against fresh data rather than last year’s budget.

Candidate experience still matters

People have grown used to quick feedback and transparent salary ranges.

Businesses that relax their service levels risk reputational damage even in a softer market.

Strategic opportunity

When competitors slow hiring, it can be an ideal moment to secure high-calibre people who were previously beyond reach.

Forward-thinking firms often consolidate talent in periods of cooling demand to position for the next upswing.

What it means for job seekers

Slightly tougher but far from bleak

There is still plenty of activity, yet applicants may face larger shortlists and more testing interviews.

Preparation and differentiation count.

Real pay gains are possible

Because wages are still growing faster than prices, a move can improve spending power, but headline jumps of ten percent plus are rarer than they were.

Evidence of impact is key

Employers are more selective, so candidates who can quantify achievements stand out.

Think percentages saved, revenue generated, projects delivered ahead of schedule.

Flexibility helps

Being open to adjacent sectors or locations increases options as vacancy growth diverges across industries and regions.

Outlook for the second half of 2025

The ONS will publish fresh data each month, and several indicators will shape the path ahead.

• Vacancies. A few more quarters of decline would signal demand cooling further. If vacancy numbers stabilise, the easing phase could plateau.

• Wage momentum. Slower pay growth helps the Bank of England feel comfortable about cutting rates, which could in turn encourage more hiring.

• Interest-rate decisions. Markets expect the first cut before the end of the year if inflation stays on track. Lower borrowing costs typically boost investment and employment.

Astute will be watching those threads closely, drawing on the real-time insight we gain from daily conversations with clients and candidates.

Practical steps you can take today

Employers

1. Audit salary bands now. Compare your levels with current market medians rather than last year’s peak.

2. Streamline selection. Use the breathing space to refine criteria, but maintain momentum so preferred candidates do not lose interest.

3. Invest in employer brand. Transparent communication about culture and progression can tip the balance when cash offers narrow.

4. Build a bench. Create talent pipelines for hard-to-fill roles before demand rebounds.

Job seekers

1. Refresh your evidence. Update metrics on your achievements and practise clear, concise storytelling.

2. Research market rates. Understand typical pay for your skill set and geography so you negotiate from an informed position.

3. Stay visible. Engage on platforms such as LinkedIn and industry groups, comment on relevant discussions, share insights.

4. Consider continuous learning. A short qualification or certification can widen opportunities when openings tighten.

Next steps

The June 2025 figures show a UK labour market moving from red-hot to warm.

For employers that provides a chance to hire strategically without the bidding wars of last year.

For workers it remains a market with opportunity, though one that now rewards thorough preparation over speed alone.

As always, context is everything.

Astute is here to help both hiring teams and professionals navigate that context with clear data and candid advice.

If you would like to discuss how the latest trends affect your hiring strategy or your next career move, get in touch.