New official government statistics show that the number of payroll employees in the UK fell by just over 109,000 in May, the largest monthly decline since May 2020, while wage growth fell to the lowest level since last September. The figures also show that the number of vacancies in the last quarter fell by 63,000 to 736,000, with unemployment rising by from 4.5% to 4.6% over the same period.
The new figures come on the same day as the latest ManpowerGroup Employment Outlook Survey reveals that employment confidence has plummeted across all sectors in the UK, with a sharp decline in hiring intentions for the third quarter of 2025.
Manpower’s Net Employment Outlook figure - calculated by surveying 2,000+ UK businesses about their recruitment plans for the months ahead – is +19%, a 12-point fall on the previous quarter and the sharpest single fall since Q2/Q3 2020. And for the first time since 2021, employers across several sectors are showing a negative intent to hire (i.e. more planning to reduce headcount than increase) in Communications Services (-7%), Energy & Utilities (-3%), Public Sector (-8%).
This collapse in confidence has been widely blamed on the triple squeeze on UK employers - rising wage bills, National Insurance hikes, and ongoing global trade and geopolitical disruption.
“The vast drop this quarter marks a one-off reset that we have been anticipating to the employment market,” sad Petra Tagg, Director, ManpowerGroup UK. “After months of uncertainty, hitting this new low is a symptom of the entire labour market re-aligning after the changes imposed by the National Insurance and Living Wage increases, alongside the recent uncertainties of the US trade tariffs. From here, employers will ‘wait and see’ to gauge the volume of the reset rather than making any swift decisions towards the end of the year.”
“This is not a collapse. It’s a measured reset,” added Michael Stull, Managing Director at ManpowerGroup UK. “Employers are pausing to protect productivity, not abandoning growth altogether. Double the number of employers on last quarter are struggling with economic uncertainty, 64% naming this as their top concern. Businesses have to balance controlling costs while investing in the future. It would appear that managing headcounts are an easy way to keep costs low and find the room to invest in tech.”
“We’re seeing a pivot in the market. Employers are leaning into temporary hiring – a flexible lower risk route as they test demand and control costs as well as the challenge of persistent attrition and disengagement, which are quietly draining productivity.”