UK unemployment held at 5.1% in the three months to November, figures out today showed.
Average regular earnings growth slowed to 4.5%, with private sector wage growth at a five-year low. Vacancy numbers showed tentative growth but payrolled numbers dip in December.
Danni Hewson, AJ Bell head of financial analysis, comments on the latest UK jobs figures: “The engine powering the UK’s labour market is still spluttering, with unemployment sticking at a five-year high, wage growth under pressure, especially in the private sector, and the number of people on payroll falling significantly in the final months of 2025.
“Unsurprisingly the retail and hospitality sectors have shouldered significant strain following increases to the cost of labour and uncertainty amongst consumers in the run up to last year’s Budget. The typically ‘golden’ quarter for those sectors looked a little tarnished with many shops, bars and restaurants scaling back their traditional hiring plans as they took stock of sentiment in the run up to Christmas.
“But there are a few positives to latch onto, the first being that slowing wage growth provides a more benign backdrop for Bank of England rate setters worried about how sticky inflation might continue to be throughout the year.
“Secondly, after 39 consecutive quarterly declines in vacancy numbers, things seem to have bottomed out and there are tentative signs the UK economy might be turning a corner. But nerves about the potential impact of any fresh tariffs could derail the momentum evident in November’s economic growth numbers, with many exporters watching events over the next few weeks very closely.
“The frail retail and hospitality sectors will be hoping the government’s pledged business rate U-turn for pubs might extend further as they face up to another year of rising costs.”
Kevin Fitzgerald, UK MD at Employment Hero, said: “Creating an environment that actively supports hiring will be crucial to unlocking the full potential of the labour market and driving better outcomes for both employers and workers. However, today’s ONS employment data is that latest demonstration of how growth in the UK labour market continues to stall.
“However, despite the employment rate remaining flat, a further uptick in vacancy numbers, following a small increase last month, is positive. Market confidence relies on sustained growth, and this is good news for jobseekers looking to land new opportunities in a competitive market. However, rising costs combined with the Employment Rights Bill becoming law last month have placed significant pressure on employers, many of whom have opted to play it safe when it comes to hiring, limiting employment growth.
“A flat employment rate aligns with Employment Hero’s real-time proprietary data, which shows that year-on-year employment growth is slowing among UK small businesses, falling from 7.8% in December 2024 to 2.5% in December 2025. Small businesses are the backbone of the economy, and it is clear that more must be done to win back their confidence.”
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