The U.K. jobs report reflected a worsening picture of the labor market, as the October claimant count change came in higher than expected at 29K versus the 17.6K consensus while the unemployment rate rose to 5.0%.
Wage growth also slowed, with the average earnings index slipping from 5.0% to 4.8% instead of holding steady for the three-month period ending in September.
Key Takeaways
- Unemployment rate reached 5.0% for the three months ending September 2025, above the 4.9% forecasted by economists ahead of the late November Budget
- Payrolled employees declined by 180,000 (0.6%) year-on-year in the early October estimate, with a monthly decrease of 32,000 (0.1%)
- Average wage growth decelerated to 4.6% for regular earnings (excluding bonuses) in the third quarter, down from 4.7% in the three months to August
- Job vacancies remained broadly unchanged, with a marginal increase of 2,000 (0.2%) to 723,000 in the August to October period
- Employment rate edged down to 75.0% for those aged 16-64, declining 0.2 percentage points quarter-on-quarter
- Economic inactivity held steady at 21.0% for the 16-64 age group, remaining largely unchanged from the previous quarter
The deterioration in employment conditions appears to reflect mounting pressures on British businesses following April’s implementation of higher employer National Insurance contributions and an increased minimum wage.
Analysts noted that companies may be responding to elevated labor costs through a combination of reduced hiring activity and natural attrition rather than direct redundancies.
Link to official U.K. Labour Market Overview
Market Reactions
British Pound vs. Major Currencies: 5-min
GBP vs. Major Currencies 5-min Forex Chart by TradingView
Sterling, which had been trading cautiously ahead of the U.K. jobs release, tumbled sharply upon seeing all the numbers come in the red. Expectations for a BOE December rate cut appear to have ticked higher, following last week’s dovish MPC split decision to keep borrowing costs on hold.
GBP sustained significant losses against CHF (-0.56%) for the remainder of the London session while also staying below post-jobs report levels against EUR (-0.32%). However, the U.K. currency trimmed some of its losses against NZD (-0.07%) and even wound up higher against AUD (+0.26%) a few hours after the release.
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