Despite a rise in the employment rate (75.1 percent) and an increase in total workforce jobs to 37.1 million, the number of payroll employees declined consistently, from a modest 55,000 drop in April to a sharper 109,000 monthly fall in the early May estimate. Over the year, the number shrank by 274,000, reflecting cooling demand in the job market. Meanwhile, unemployment rose to 4.6 percent, and economic inactivity increased to 21.3 percent, suggesting some return to the labour force but not enough to offset job losses.

Vacancies also fell for the 35th consecutive quarter, pointing to firms' hesitancy to hire or replace staff. Yet wage growth remained robust. Annual regular earnings rose by 5.3 percent, with real-term growth at 1.4 percent (CPIH-adjusted) and 2.1 percent (CPI-adjusted). Also, the claimant counts for May 2025 increased on the month and the year, to 1.735 million.

The public sector saw slightly stronger pay growth than the private sector. While earnings are improving and job numbers are expanding overall, persistent declines in payroll and vacancies signal a labour market under pressure. These latest updates takes the RPI to 43 and the RPI-P to 34, meaning that economic activities are well ahead of market expectations in the UK economy.

ILO unemployment is expected to rise to 4.6 percent in May from 4.4 percent in April. Earnings including bonuses are expected up 5.4 percent from a year ago versus 5.6 percent in April.

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.