UK Labour Market Continues to Show Weakness into Late 2025

The United Kingdom’s labour market demonstrated further signs of cooling as the number of online job vacancies declined for the sixth straight month in December 2025, according to recent employment data. This extended downturn points to a broader weakening in hiring activity and increased competition for jobs, reflecting challenges across several sectors of the economy and offering important insights for policymakers and workers alike.

Persistent Decline in Online Job Vacancies

Data from the job portal Adzuna revealed that the total number of online job vacancies in the UK dropped from 745,448 in November to 716,791 in December, representing approximately a 15% decrease compared with the same period a year earlier. This sustained reduction marks the weakest annual performance in job vacancies since 2020, when the economy was first unsettled by the COVID-19 pandemic.

The decline in advertised job openings indicates that employers across many major sectors are exercising caution in recruitment. The typical end-of-year uplift in hiring often seen as businesses gear up for the new year did not materialise in 2025, further underscoring the subdued demand for labour.

Competition Intensifies as Hiring Slows

According to Adzuna co-founder Andrew Hunter, competition for roles has intensified within the UK labour market, particularly as hiring slowed across a range of industries. Many sectors that traditionally lead employment growth, such as hospitality, retail, and services, experienced notable slowdowns in filling open positions.

Despite this general downturn, there were early indications of recovery in select parts of the market, especially in graduate and entry-level positions. While these modest improvements could suggest “green shoots” for younger jobseekers, they remain small compared with the broader cooling trend.

Advertised Salaries Continue Rising, But at a Slower Pace

Among the few positive aspects of the latest data is the continued rise in advertised salaries year-on-year. However, this increase has begun to slow. In December, average advertised pay was 6.8% higher than a year ago, compared with a 7.7% rise recorded in November.

While wage growth remaining above inflation can be a positive sign for employees, the deceleration suggests that employers may be becoming less inclined to raise offered pay as competition for roles intensifies and economic uncertainty persists.

Business Outlook Remains Cautious

A separate survey from the Confederation of British Industry (CBI) also reflected a cautious outlook among UK businesses. Although some business expectations showed modest improvement, overall sentiment remained subdued. The CBI’s growth indicator for the next three months rose from -30 to -20, hinting at slight optimism but still pointing to challenging conditions for firms operating within the current economic environment.

Some of this hesitancy appears tied to ongoing cost pressures, including higher employer taxes and broader global economic uncertainty, which have influenced companies’ hiring decisions and spending plans.

Bank of England Closely Watching Labour Indicators

The Bank of England (BoE) is monitoring labour market trends closely, especially as they relate to wage growth and inflationary pressures. A cooling jobs market with slower salary increases can potentially relieve some upward pressure on inflation, but it also introduces concerns about economic stagnation and higher unemployment.

Interest rate decisions by the BoE will likely consider these evolving dynamics, seeking a delicate balance between supporting economic growth and keeping inflation in check. How the labour market continues to perform in the coming months could influence the central bank’s decisions on possible future interest rate changes.

Ongoing Weakness in Broader UK Labour Indicators

The cooling trend in advertised job vacancies is part of a broader weakening in the UK labour market, with other indicators such as unemployment and private sector wage growth also suggesting softer conditions in recent months. For example, official labour market statistics have shown unemployment rates rising to levels not seen in several years, while wage growth outside of bonuses has slowed in the private sector.

While some regions and sectors may adapt more quickly, such as areas with increased demand for specialised or entry-level roles, the overall picture underscores a challenging environment for jobseekers and employers alike.

Impact on Jobseekers and Workers

For individuals seeking work or considering career changes, the current conditions mean more competition for fewer advertised positions. Entry-level jobseekers, in particular, may face stronger competition as businesses adjust to tighter hiring environments.

However, trends showing some early recovery in graduate and entry roles also suggest opportunities may still exist for those with in-demand skills or in sectors less affected by broader declines. Jobseekers may benefit from focusing on skill development and flexibility to adapt to evolving hiring trends.

Future Outlook and Market Expectations

Economists and business analysts will continue to watch labour market data closely as 2026 progresses. Improvements in economic activity, shifts in global markets, and policy changes both within the UK and internationally could influence how quickly the labour market stabilises or recovers.

If wage growth slows further and unemployment continues to edge up, this could signal a deeper adjustment in the UK labour market. Conversely, renewed business confidence or targeted policy support could help reinvigorate hiring in key sectors.

Summary

The UK labour market’s cooling trend, highlighted by consecutive monthly declines in online job vacancies and slower wage growth, reflects ongoing economic challenges as 2025 draws to a close. With subdued hiring, cautious business sentiment, and broader indicators pointing to labour market weakness, the coming months will be crucial in determining the trajectory of employment conditions in the UK.

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