What's happened
As of late 2025, both the UK and US labor markets reveal signs of weakening. The UK’s unemployment rate rose to 5.1% by October, the highest since early 2021, with payrolls shrinking and wage growth slowing. In the US, November saw 64,000 jobs added after October losses, but unemployment rose to 4.6%, amid data disruptions from a prolonged government shutdown and ongoing economic uncertainty.
What's behind the headline?
Labor Market Weakness in Two Major Economies
- Both the UK and US are experiencing labor market slowdowns, but for different structural and political reasons.
- In the UK, rising unemployment to 5.1% and falling payroll numbers reflect employer caution following tax hikes and budget uncertainty, especially impacting younger workers.
- The US labor market shows a mixed picture: a rebound in November jobs masks underlying stagnation, with unemployment rising and wage growth cooling.
- Government shutdown effects in the US have delayed and complicated data, obscuring the true labor market health.
- Sectoral shifts are evident: healthcare and construction show gains, while manufacturing and government jobs decline.
- Wage growth slowing in both countries signals reduced worker bargaining power amid economic caution.
- The Bank of England is poised to cut interest rates, reflecting concerns over inflation and economic fragility.
- The Federal Reserve’s recent rate cut and cautious outlook underscore uncertainty about the US labor market’s resilience.
Implications for Workers and Policymakers
- Younger workers in the UK face rising unemployment and fewer entry-level opportunities, exacerbated by rising minimum wages and employer costs.
- US labor supply constraints, partly due to immigration policies, keep unemployment rates artificially steady despite weak job growth.
- Policymakers must balance inflation control with supporting labor demand amid economic headwinds.
- The ongoing uncertainty and data challenges will complicate economic forecasting and policy decisions into 2026.
Outlook
- Labor markets in both countries will likely remain fragile in the near term.
- Interest rate adjustments and fiscal policies will be critical to stabilizing employment.
- Workers should prepare for a cautious hiring environment, especially in vulnerable sectors and age groups.
What the papers say
Reuters highlights the UK’s 15.2% drop in online job adverts over 12 months and a rise in unemployment to 5.1%, noting employer wariness after tax hikes in Finance Minister Rachel Reeves’s budgets. The Independent and Sky News emphasize the UK’s highest unemployment since early 2021, with young workers disproportionately affected and payrolls falling by 38,000 in November. Sky News quotes ONS director Liz McKeown on a weakening labor market and highlights government efforts to support apprenticeships.
In the US, Al Jazeera reports 64,000 jobs added in November after a 105,000 loss in October, with unemployment rising to 4.6%. The report notes the impact of the 43-day government shutdown on data collection and job losses among federal workers. The Guardian and New York Times discuss the confusing labor market picture due to delayed data and policy uncertainty, quoting Fed Chair Jerome Powell’s caution about data reliability and labor supply issues. Business Insider UK and the New York Times provide detailed sectoral analysis, noting healthcare and construction gains but manufacturing declines, and highlight slow wage growth and low quit rates as signs of stagnation.
Together, these sources paint a nuanced picture of labor market fragility in both countries, shaped by political decisions, economic pressures, and data challenges.
How we got here
The UK’s labor market has been pressured by increased social security contributions and budget uncertainties, while the US faced a 43-day government shutdown disrupting data collection. Both economies are grappling with inflation concerns, cautious hiring, and sector-specific job shifts, notably in healthcare and manufacturing.
Go deeper
- Why is youth unemployment rising in the UK?
- How did the US government shutdown affect labor data?
- What sectors are driving job growth and losses in both countries?
Common question
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Why Is UK Unemployment Hitting a Four-Year High?
The UK is experiencing a rise in unemployment, reaching levels not seen since early 2016. This increase is raising concerns about economic stability and job security. Many are asking what’s causing this trend and how it might affect the future of work in the UK. Below, we explore the key factors behind the rising unemployment and what it means for workers and policymakers alike.
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Are US and UK jobs really shrinking in 2025?
As of late 2025, both the UK and US labor markets are showing signs of strain, with rising unemployment and slowing wage growth. Many are wondering if these trends mean job losses are permanent or if the markets will bounce back soon. In this page, we explore the current state of employment in both countries, what’s causing these shifts, and what it means for workers and job seekers alike.
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The Office for National Statistics is the executive office of the UK Statistics Authority, a non-ministerial department which reports directly to the UK Parliament.
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The Bureau of Labor Statistics is a unit of the United States Department of Labor. It is the principal fact-finding agency for the U.S. government in the broad field of labor economics and statistics and serves as a principal agency of the U.S.
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The United States Department of Labor is a cabinet-level department of the U.S. federal government responsible for occupational safety, wage and hour standards, unemployment insurance benefits, reemployment services, and some economic statistics; many U.S
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Rachel Jane Reeves is a British Labour Party politician serving as Shadow Chancellor of the Duchy of Lancaster and Shadow Minister for the Cabinet Office since 2020. She has been the Member of Parliament for Leeds West since 2010.
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The Bank of England is the central bank of the United Kingdom and the model on which most modern central banks have been based.