UK Data Deepens Economic Soft Patch, Pressures Sterling

Labour Market Stuck in Neutral

The CIPD survey painted a similar picture of stagnation. The net employment balance held at plus 9, close to its lowest level outside the pandemic. Private-sector hiring intentions stayed at plus 11, matching a record low outside the pandemic era. Just 57% of private-sector employers plan to recruit in the next three months, also a joint post-pandemic low, the CIPD said. Redundancy levels have not risen, prompting the CIPD to describe the labour market as low-hire, low-fire rather than one shedding jobs outright. Median expected pay rises held at 3% for more than two years. About 31% of employers reported hard-to-fill vacancies, and 14% expect significant recruitment difficulties over the next six months. The CIPD called for lower hiring costs and greater support for youth employment.

The two surveys land a day ahead of official labour market data and add to the picture the Bank of England is weighing as it considers its next move on interest rates. The BoE has kept rates on hold since December 2025 and is not scheduled to meet again for another month. The combination of weak housing momentum and soft hiring intentions suggests a consumer backdrop that remains fragile. That dynamic is likely to weigh on sterling and keep gilt yields anchored to dovish rate expectations. The London-versus-north divergence in house prices also reinforces a narrative of an economy healing unevenly rather than broadly, which could complicate the BoE's read on underlying demand. Markets are likely to treat both data points as reinforcing rather than new information, given confidence readings have sat near post-pandemic lows for some time.

Official labour market data due Tuesday will show wage growth, employment changes, and unemployment figures, all of which feed into the BoE's assessment of inflationary pressures. Until then, the housing and hiring data have set a cautious tone for sterling and gilt markets.