UK Employment Sees Strongest Growth In 13 Months

Despite the looming Autumn Budget, burgeoning confidence is spreading among UK SMEs amid the strongest month-on-month rise in employment in over a year.

After more than 12 months of sluggish growth, September marks a turning point after last winter’s slowdown. The latest updates from Employment Hero’s monthly jobs data suggests we’re in a period of cautious recovery in terms of full-time roles and wages, but we’re not quite out of the woods yet. With inflationary challenges and regional divides still present, progress could still be much faster.

Still, there’s hope in the air. With momentum gradually building, the first green shoots of a broader recovery are beginning to show. The question is whether those shoots will take root and grow, or wither under the pressure of ongoing challenges. For a better sense of what’s taking root, it’s worth looking closer at the numbers.

On the Road to Recovery

Employment Hero’s data, shows employment rose 2.6% in September, the strongest monthly lift in 13 months. On an annual basis, growth reached 2.7%, up from 1.6% in August, signalling that recovery, while gradual, is gathering momentum.

Full-time employment rose 2.1% month on month and 5.0% over the year, continuing the upward trend seen since last year’s post-Budget slowdown. Meanwhile, part-time and casual roles increased by 1.2% month on month and 2.2% year on year, suggesting that employers are opting for stability over short-term flexibility.

It’s a positive sign that employment is moving in the right direction, but the story isn’t complete without looking at what’s happening to wages.

Pay Packets Are Rising

It may not feel like it for many workers, but pay growth has been slowly gathering pace since spring. Wages rose by 3.0% in September, putting them 5.0% higher than three months ago and 2.2% above last year’s level. Progress may be gradual, but it is steady and after a sluggish start to the year, even small gains matter.

Some groups are seeing bigger lifts than others. Boomers recorded the strongest rise, up 5.0% month on month, with Gen X close behind at 4.5%. Gen Y and Z have seen smaller increases, at 2.4% and 2.7% respectively. For older workers who slipped behind earlier in the year, that is a welcome catch-up. 

Overall, inflation continues to dull the impact of those increases. Wages are moving in the right direction, just not to the extent that pay growth is sitting in line with inflation. And as the data shows, where you live still shapes how far your pay rise really goes.

The South and East Lead the Way

The South has made something of a comeback in recent months. Not only has the region seen the strongest employment growth in the country, up 5% month on month, it also marks an encouraging sign that confidence is returning to local businesses after a long period of uncertainty.

London, meanwhile, hasn’t quite matched those improvements. With 1.3% month on month growth, the capital is stalling. Together, the data suggests that while London’s recovery is lagging, the South may be finding its footing, with confidence beginning to build beyond the capital.

As employment steadies across regions, wages tell another story. In London, average pay rose 4.1% in September but remains slightly below last year’s level, down 0.2% year on year. The East, by contrast, recorded an impressive 11.0% annual increase and 2.2% month-on-month growth, continuing a year-long run of consistent gains. It’s a striking turnaround from the 7.9% annual decline recorded this time last year and highlights not only that wage momentum is strongest outside the capital, but that the East has quietly become one of the country’s strong performers.

These patterns are echoed in the broader labour market, where some industries are finding their rhythm while others are still struggling to recover.

Hospitality and Professional Services Stand Out

Some sectors are doing better than others. After a challenging period, hospitality businesses are starting to regain ground. Employment rose 4.1% in September, possibly hinting at early signs of renewed confidence after months of weak hiring.Year-on-year growth, however, remains subdued at just 1.5%, well below the national average.

Part of the pressure lies in pay. Wages in hospitality increased 3.5% month on month and 16.6% year on year, suggesting that rising staffing costs may be limiting how quickly employers can expand their teams. Professional service sectors such as accounting, HR, and legal, however, have recorded stronger hiring momentum, with employment up 5.0% month on month. 

Across industries, the pattern is clear: recovery is uneven. Some sectors are benefitting from renewed business demand, while others are still contending with the combined strain of higher costs and shifting consumer habits. How the upcoming Budget will affect this recovery remains to be seen, but after last year’s slowdown, many businesses would welcome a period of calm.

Gen Z Takes the Lead

Generational trends reveal another layer of recovery. For all the talk of Gen Z lacking resilience, the data points to a generation that is adapting quickly and taking an active role in recovery.

Gen Z employment rose 2.8 % month on month and 8.3% year on year, marking the strongest growth of any age group. Gen Y followed with a 1.8% monthly increase, Gen X rose 2.5%, and Boomers saw a 1.6 % rise, though their employment remains 5.3% lower than a year ago.

The data suggests that younger workers are playing a key role in the current phase of recovery, taking a larger share of new opportunities – possibly in part because they are more cost-efficient for employers. While the figures do not point to specific causes, they reflect a clear generational shift in the makeup of the workforce.

For employers, the rise in younger workers highlights a simultaneous opportunity and challenge: they bring energy and adaptability, but maintaining long-term engagement and progression will be essential to sustain momentum as recovery continues.

Cautious Optimism Ahead

September’s figures paint a picture of cautious optimism. Employment and wages are improving, and confidence appears to be returning to SMEs after a turbulent year.

Even so, recovery remains uneven. Employment is up 2.7% year on year, while wages have risen 2.2%, highlighting steady but unspectacular progress. Not only has inflation continued to erode much of those increases, but regional divides also persist, with the South and East seeing stronger momentum than London and the North.

There are, however, signs of resilience. The steady growth in full-time work and the gradual strengthening of pay across most industries suggest that many small and medium businesses are regaining their footing after last year’s winter slowdown. For employers and employees alike, the coming months will be a test of whether this momentum can hold through winter – and whether policy decisions in the next Budget will help or hinder that fragile progress. If businesses can hold their nerve through this period, the seeds of recovery might just bear more fruit.