Unemployment rate rises to 4.9% in June, as payroll numbers fall – ONS

The provisional figure was largely unchanged on the month, declining by 13,000.

The ONS cautioned that the July payroll estimate is likely to be revised as further data are received.

Reaction:

Kevin Fitzgerald, UK MD at Employment Hero:

“The labour market needs confidence, and right now small businesses are still being asked to do a lot with very little room to manoeuvre. Today’s ONS figures show unemployment remains elevated, while businesses continue to deal with rising costs, more regulation and ongoing economic uncertainty. If we want businesses to hire, we need to make it easier for them to do so.

“That said, there are some green shoots. Our own platform data shows modest employment growth in sectors including construction, healthcare and retail, and we’re seeing particularly encouraging signs in the North of England, where both employment and wage growth outpaced London in July.

“The willingness to hire is there, but confidence is holding businesses back. Ahead of the Autumn Budget, the Government needs to focus on creating the conditions for small businesses to grow and take people on. That means greater certainty, fewer barriers and policies that support businesses rather than pile more pressure on them. If we get that right, there’s a real opportunity to turn cautious optimism into stronger employment growth.”

Kate Field, global head of human and social sustainability at the British Standards Institution (BSI):

“Today’s figures raise concern for the UK economy: economic inactivity driven by long-term sickness is ticking upwards to 2,774,000¹ people after falling at the end of 2025, while vacancies have dropped to 707,000², their lowest level since early 2021³.

“This dual pressure creates a dangerous squeeze for small businesses. With recruitment slowing, employers can no longer rely on replacing talent when people leave⁴. Losing an experienced employee to ill health can leave small teams overstretched and create costs many businesses can ill afford, compounding already difficult issues.

“We must address this challenge at the workplace level by actively supporting employees with their health to help them stay in work and productive. BSI’s research shows that nearly 30%⁴ of workers facing psychological challenges, for instance, receive no support services from their employer when issues arise, driving higher absence and avoidable job exits.”

Julian Jessop, independent economist and IEA Economics Fellow:

“Today’s labour market data are dire. The UK economy continues to shed payroll jobs, with a net losses of 94,000 over the past year and 188,000 since July 2024. The unemployment rate remains stubbornly high, with a big jump in the single month figure for June.

“Reflecting the weakness of demand for labour, regular pay growth in the private sector has slowed to less than 3%, which will not be enough to keep pace with inflation in the second half of the year.

“In contrast, pay growth in the public sector is running above 6%. This divergence is unsustainable.

“Britain’s labour market is continuing to show the strain of the rising costs of employment.

“Businesses have been hit by higher employer National Insurance, a higher minimum wage and an expanding regulatory burden. It should be no surprise that employers  arte responding by hiring fewer people, cutting vacancies and holding down wages.

“The Government cannot tax and regulate its way to a stronger labour market. Ministers should focus on reducing the cost of hiring, removing barriers to work and giving businesses the confidence to invest and create jobs.”