The UK labour market in early 2025 reflects that payrolled employee numbers showed minimal monthly movement, with a slight rise of 9,000 between December 2024 and January 2025 and a yearly gain of 44,000, indicating stability rather than strong growth. Similarly, the provisional February 2025 data show a modest monthly increase of 21,000. While the employment rate rose to 75.0 percent, the unemployment rate also increased to 4.4 percent, which is in line with the consensus and suggests some displacement or labour market churn. Economic inactivity dropped to 21.5 percent, indicating a return of some individuals to the labour force.

The number of workforce jobs rose significantly by 403,000 over the year, mainly due to employee job increases. Public sector employment also expanded modestly. Vacancies remained high at 816,000, signalling continued employer demand, though levels have plateaued. Wages continued to grow, with regular pay increasing by 5.9 percent and real wage growth at 2.2 percent, outpacing inflation. However, 50,000 working days lost to labour disputes in January 2025 reflect persistent tensions in some sectors.

In essence, the figures suggest cautious optimism, with ongoing recovery tempered by labour market volatility and mixed signals across employment indicators. This latest update takes the UK RPI to 15 and the RPI-P to 26. This means that economic activities are far ahead of market expectations in the UK economy.

ILO unemployment is expected flat at 4.4 percent versus 4.4 percent in the last reading.

The Labour Market Report covers a number of key areas of the jobs market. Unemployment is updated on the basis of two separate surveys: the claimant count, which measures the number of people claiming unemployment-related benefits, and the more reliable but lagging International Labour Organization's (ILO) measure that excludes jobseekers that did any work during the month and covers those people who are both looking and are available for work. Average earnings growth, a key determinant of inflation, is also updated.

The labour market survey gives the most comprehensive report on how many people are looking for jobs, how many have them and what they are getting paid and how many hours they are working. These numbers are the best way to gauge the current state as well as the future direction of the economy.

The survey also provides information on wage trends, and wage inflation is high on the Bank of England's list of enemies. Bank officials constantly monitor this data watching for even the smallest signs of potential inflationary pressures, even when economic conditions are soggy. If inflation is under control, it is easier for the Bank to maintain a more accommodative monetary policy. If inflation is a problem, the Bank is limited in providing economic stimulus - it must stay within range of its mandated inflation target.

By tracking the jobs data, investors can sense the degree of tightness in the job market. If wage inflation threatens, it is a reasonable bet that interest rates will have to rise and bond and stock prices will fall. In contrast, when jobs growth is slow or negative, then interest rates are more likely to decline - boosting bond and stock prices in the process.