Publication - Research and analysis

Scottish economic bulletin: August 2025

Provides a summary of latest key economic statistics, forecasts and analysis on the Scottish economy.

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Unemployment fell to 3.7% in the three months to May, and hiring intentions continue to stabilise.

Scotland’s labour market has remained resilient at the start of 2025 in the face of elevated economic uncertainty, however there are indications that conditions have slightly softened over the past year.
The LFS for March to May shows Scotland’s unemployment rate (3.7%) fell 0.5 percentage points (p.p) over the quarter, and is 1.2 p.p lower than at the same time last year. Alongside this, Scotland’s employment rate (74.9%) rose 0.6 p.p. over the quarter and by 2.3 p.p over the year and the inactivity rate (22.2%) fell by 0.2 p.p over the quarter and by 1.4 p.p over the year.^[10]^,[11]

Pay as you Earn Real Time Information data for June continues to indicate some softening in the labour market with the number of payrolled employees in Scotland (2.45 million) falling by 0.1% (c. 1,300 employees) over the month and by 0.6% (c. 15,900 employees) annually.^[12]

Furthermore, Scotland’s Claimant Count unemployment rate rose moderately to 3.6% in June (from 3.5% in May), with the number of people claiming unemployment related benefits in Scotland (107,227) up 1.7% over the month, albeit that it is has fallen 1.2% over the past year.^[13]^,[14]

Demand for labour has been stabilising over the past 18 months from more elevated levels in 2022 and 2023 and most recently has been impacted by a range of factors including increased economic uncertainty and labour costs.
ONS Textkernel data shows that the number of new online job adverts posted has increased since the start of the year with c. 50,600 new online job adverts posted in Scotland in June, up 9.0% from June last year. In the UK as a whole, posting of new online job adverts rose 3.3% over the year in June.^[15]

BICS data indicates an increasingly stabilising demand outlook, with the majority of businesses reporting that they expect the number of employees to remain unchanged in August. This has recently picked up moderately from 65.6% in May to 68.9% in August. The shares of businesses reporting that they expect employee numbers to rise or fall in August have both decreased in recent months to 15.1% and 8.3% respectively.

Evidence from other business surveys indicate that the loosening in the labour market over the past year has been more stable in recent months. The latest Scottish Business Monitor for Q2 2025 shows that businesses on balance have lowered employment for a third consecutive quarter, but to a lesser degree than during Q1 2025, while the RBS Growth Tracker indicates that private sector staffing levels have been relatively stable in June for a third month having been indicating a contraction in staffing numbers since the end of 2024.

Labour earnings have continued a trend of positive real terms growth, albeit at a slower pace than in 2024, partly reflecting the pick-up in inflation rate.

Nominal median monthly PAYE pay in Scotland (£2,546) grew by 5.4% on an annual basis in June, with the pace of growth picking up from May. In real terms, adjusting for inflation, earnings grew 1.7%, unchanged from May. The pace of nominal growth is slightly lower than the average annual rate in 2024, however it has been more stable over the past twelve months following the volatility in recent years.^[16]

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