Recruiters See Demand Dwindle, Despite Growing Labour Pool
The UK labour market showed fresh signs of strain in July 2025, with recruitment firms facing tighter job markets and rising candidate availability. According to the latest data, payrolled employees fell by 25,000 between April and May and by a substantial 135,000 year-on-year to 30.3 million.
Early estimates for June 2025 are even more concerning, showing a provisional monthly drop of 41,000 and a steep year-on-year fall of 178,000. These figures, while subject to revision, reinforce the message that employers are pulling back on hiring.
Vacancies Continue to Slide: 727,000 and Falling
Recruiters are now grappling with the 36th consecutive quarterly decline in vacancies. The number of available jobs in the UK fell by 56,000 to 727,000 between April and June — a level not seen since before the pandemic. Most sectors (14 out of 18) reported fewer openings, with businesses reluctant to replace leavers or expand teams.
Insights from the Vacancy Survey point to economic caution as firms pause growth plans and recruitment, creating a significant headwind for agencies dependent on job volume.
Silver Lining: Bigger Talent Pool and Real Wage Growth
Despite weaker demand, the employment rate rose slightly to 75.2%, while the unemployment rate increased to 4.7%, offering recruiters a growing candidate pool. Economic inactivity dropped to 21.0%, its lowest in recent quarters, suggesting more people are ready to work — even if the jobs aren’t there yet.
Pay continues to rise, albeit more modestly. Earnings grew by 5.0% year-on-year, with real terms increases of just 1.1% (CPIH-adjusted). The public sector outpaced the private in wage growth, suggesting that public service roles may present better opportunities for placements.
Recruitment Outlook: Strategic Focus Needed
For recruiters, the July snapshot offers both challenge and opportunity. With vacancies falling and businesses hesitating, the emphasis must shift to candidate care, sector resilience, and deep client relationships. The growing labour pool — combined with moderate real wage increases — means high-quality matching will be more important than ever.
The road ahead looks cautious, but not closed. For those in recruitment, agility and insight will be the keys to navigating this shifting market.
Vacancies and jobs in the UK: July 2025
- The estimated number of vacancies in the UK fell by 56,000 (7.2%) on the quarter, to 727,000 in April to June 2025.
- This is the 36th consecutive period where vacancy numbers have dropped compared with the previous three months, with vacancies decreasing in 14 of the 18 industry sectors.
- Total estimated vacancies were down by 143,000 (16.5%) in April to June 2025 from the level of a year ago, and 68,000 (8.6%) below their pre-coronavirus (COVID-19) January to March 2020 level.
- The number of unemployed people per vacancy was 2.3 in March to May 2025; this is up from 2.0 in the previous quarter (December 2024 to February 2025).
Office for National Statistics (ONS), released 17 July 2025, ONS website, statistical bulletin, Labour market overview, UK: July 2025
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