1. Headline indicators

Employment in January 2025 rose by 44,000 on the previous month and by 111,000 on the August-October 2024 quarter, to 32,342,000. The employment rate for those aged 16-64 rose was almost unchanged at 75.0% compared with 74.9% in the previous quarter.

Economic inactivity for those aged 16-64 fell by 65,000 on the previous quarter to 9.27 million. The economic inactivity rate fell slightly, to 21.5% from 21.7% in the last quarter.

Unemployment for those aged 16-64 went up by 43,000 compared with the previous quarter, to 1.51 million. The unemployment rate was virtually unchanged, at 4.5% compared with 4.4% in the previous quarter.

To explore how key labour market indicators have changed over the past 10 years, see our interactive labour market dashboard.

2. Divergence between the Labour Force Survey and other sources in recent years

Our headline indicators are based on data from the Labour Force Survey, but since the pandemic this has experienced a decline in the response rate which affects the reliability of estimates from this source. This is illustrated by the divergence in the employment rate estimated from the LFS and other sources over this period. While the ONS seeks to resolve these issues, we are publishing an experimental estimate of the employment rate based on an approach developed by the Resolution Foundation and using administrative data sources, such as HM Revenue and Customs payroll and self-assessment data on the numbers of people self-employed. This measure indicates that in the November 2024-January 2025 quarter the employment rate for those aged 16-64 stood at 75.5%. This was 0.5 percentage points higher than the LFS estimate. We aim to refine this approach in the months ahead.

3. Nominal pay rises continue to outstrip inflation

The latest data show average regular earnings grew by 5.9% in the year to January 2025, unchanged on 5.9% in December 2024 and down from the post-pandemic peak of 7.9% in August 2023. For public sector workers average regular earnings grew by 5.3% in the year to January 2025, while average regular earnings grew by 6.1% for private sector workers. After taking account of inflation, real regular earnings went up by 2.2% (3-month average change) in the year to January 2025, with the single month data for January showing a real-terms increase of 2.1% over the year.

The rate of inflation rose from 3.5% in December 2024 to 3.9% in January 2025. In the year to January 2025 core CPIH (excluding energy, food, alcohol and tobacco) rose by 4.6%, up on the 4.2% increase seen in the year to December 2024. This rise in the rate of inflation was driven by an increase in the magnitude of price rises for both good and services. The inflation rate for services rose from 5.4% in December 2024 to 5.8% in January 2025 while the rate of inflation for goods increased from 0.7% to 1.0% over the same period.

Inflation in areas like Housing and household services, Owner occupiers’ housing costs, Communication and Education is still high. In January the UK had the second highest rate of inflation in the G7, just behind Japan, where the inflation rate was 4.0%. The United States is currently experiencing an inflation rate of 2.8% while the Eurozone average is 2.5%. Weak growth since the global financial crisis means average earnings are around £12,000 per year lower than if pre-crisis trends had continued.

4. There are fewer potential workers for employers to recruit, with nearly 1 million fewer over 50s in the labour market since the pandemic started

Recruitment has been more challenging for employers since the pandemic because of rises in economic inactivity – people leaving the labour market. The number of people aged 50 to 64 who are economically inactive has increased by 9.7% since the pandemic started.

Economic inactivity has fallen slightly in the most recent quarter, with the rate standing at 21.5% for those aged 16-64 in November 2024 to January 2025 – down from 21.7% in the previous quarter. Overall, the number of those aged 16-64 who are economic inactive is 822,000 higher than pre-pandemic, yet only one-in-ten out-of-work older people and people with a disability get employment support each year. The Government needs to extend employment support to more people outside the labour market and employers need to think about recruitment and job design to attract and retain staff.

5. The proportion of 16- to 24-year-olds not in employment or full-time education has risen over the past year

The unemployment rate for young people aged between 16 and 24 in the November 2024 to January 2025 quarter was 14.5%, 2.3 percentage points higher than the rate in the same quarter one year earlier (12.2%). The number of young people aged between 16 and 24 who are not in employment or full-time education currently stands at 1,263,000.

The percentage of those aged 16-17 who were not in employment or full-time education was higher in November 2024 to January 2025 compared with the same quarter one year earlier (9.6% and 8.3% respectively). Over the same period the percentage of 18-to-24-year-olds who were not in employment or full-time education rose from 16.9% to 19.2%. Our Youth Opportunity Index gives a detailed portrait of the opportunities and challenges for every young person broken down by local education authority.

6. Signs of caution by employers, while 2.0 million people who are economically inactive want a job

Employers are required to give the Insolvency Service advanced notice of any plans to make 20 or more employees at a single establishment redundant by completing an HR1 form. This gives an estimate of potential redundancies before plans are finalised. The minimum notice period required ranges from 30 to 45 days, depending on the number of employees at risk of redundancy. While there is no advanced notice of most redundancies, information from the HR1 form does provides an early indicator of a possible change in the labour market. For example, a spike in potential redundancies in June 2020 was followed by a peak in the number of people made redundant in the September to November quarter of 2020.

In the December 2024 to February 2025 quarter potential redundancies stood at an average of 22,800 a month, a slight increase on the monthly average of 20,561 over the previous quarter. This suggests that actual redundancies may rise in the coming months.

Headline vacancies in the December 2024 to February 2025 quarter were almost unchanged on the previous quarter. The headline ONS vacancy figure is both seasonally adjusted and a three-month average. The general downward trend in vacancies and modest rise in redundancies suggest employers are currently cautious about the state of the economy.

Using the official measure of unemployment, there are 1.9 unemployed people for every vacancy. However, there are an additional 2.0 million people who are economically inactive but want a job. People in this group will need to be supported to find work if the government is to achieve its ambition of an 80 per cent employment rate.

7. Numbers out-of-work and claiming unemployment-related benefits below the ILO measure of unemployment

From those aged 16 or more, unemployment in the November 2024 to January 2025 quarter was 1,545,000. The quarterly headline figure has risen by 40,000 since August to October 2024.

Under Universal Credit, people who are in employment, but on very low earnings are required to search for work. The administrative earnings threshold, below which claimants are required to engage in work search, has increased over time, bringing more employed people into the claimant count. At present, those making an individual claim for Universal Credit are required to look for better-paid work if they earn less than £892 during the month-long assessment period. Those claiming Universal Credit as part of a couple are obliged to look for better-paid work if their combined earnings are less than £1,437 in the assessment period.

Adjusting the claimant count to exclude those who are employed at some point during the month-long assessment period may understate the number of people who are unemployed and claiming out-of-work benefits on a particular day within that period. However, excluding employed claimants means the adjusted claimant count is more comparable with the official quarterly estimate of unemployment.

After excluding 312,550 individuals who were in very low-paid work at some point during the assessment period, 1,418,244 people were unemployed and claiming out-of-work benefits in January 2025. The number of people who were claiming unemployment-related benefits while out-of-work was 127,000 lower than the number unemployed on the official quarterly measure.

8. Unemployment rates fairly stable for older people but remain high for those aged 16-24

The 16- to 24-year-old unemployment rate (including students) was 14.5% of the economically active in the November 2024 to January 2025 quarter. The rate for those aged 25 to 49 was 3.2%. For those aged 50 and over it was 2.4%. Compared with the previous quarter the unemployment rate has increased by 0.5 percentage points for 16- to 24-year-olds, but is almost unchanged for those aged 25 to 49 (up by 0.1 percentage points) and those aged 50 or more (down by 0.1 percentage points). Compared with one year earlier, the unemployment rate for 16-to-24-year-olds was 2.3 percentage points higher in the November 2024 to January 2025 quarter, while there was no change for those aged 25 to 49 and for those aged 50 or more.

9. Early signs youth long-term unemployment may be starting to plateau

Youth long-term unemployment (which can include students) is almost unchanged over the last quarter and stood at 201,000 in the November 2024 to January 2025 quarter. It has risen by 44,000 over the past year. Long-term unemployment for young people is normally counted as being unemployed for six months or more.

Adult long-term unemployment on the survey measure was 210,000 in the November 2024 to January 2025 quarter. The number of people aged 25 and over out of work for 12 months or more was 22,000 lower in the most recent quarter than in the previous quarter (August to October 2024). Compared with the same quarter one year earlier, adult long-term unemployment has fallen slightly, by 9,000.

10. The employment picture varies across the country

The smaller sample sizes underlying regional estimates of employment and economic inactivity mean that caution is needed in interpreting changes over time. However, employment rates in the November 2024 to January 2025 quarter were higher than the equivalent quarter one year earlier in Scotland, the South West, the East of England, the West Midlands, the East Midlands and the North West. The South West of England saw the largest increase in the employment rate, at 2.0 percentage points. By contrast, employment rates in November 2024 to January 2025 were lower than they had been one year earlier in Northern Ireland, London and Yorkshire and the Humber. The fall in the employment rate over this period was greatest in London, where it declined by 2.0 percentage points. In Wales, the South East and the North East there was little change in the employment rate compared with one year earlier.

The rate of economic inactivity in the November 2024 to January 2025 quarter was lower than it was one year earlier in Wales, the South West, the East of England, the West Midlands and the North West. The reduction in economic inactivity was greatest in the South West, where it fell by 2.1 percentage points over this period. In Northern Ireland and Yorkshire and the Humber the rate of economic inactivity rose compared with one year earlier. The increase in the rate of economic inactivity was most pronounced in Northern Ireland, which saw a rise of 1.0 percentage points. In Scotland, the South East, London, the East Midlands and the North East there was little change in the rate of economic inactivity compared with one year earlier. This varying picture, which is even greater at sub-regional level, shows the importance of tackling inequalities so everyone has a fair chance in life wherever they live.