UK Economics: A quiet, but telling, thread on the labour market beneath the May GDP figures

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UK Economics: A quiet, but telling, thread on the labour market beneath the May GDP figures

UK Economics

16 July 2026 Citi Research

Figure 1. Breakdown of GVA Figure 2. Sectoral breakdown of potential

redundancies (NSA)

© 2026 Citigroup Inc. No redistribution without Citigroup's written permission.

Sectoral data for potential redundancies only available till May 2026.

Source: Citi Research, ONS

Further signs of labour-market strain are visible within the services GVA data itself. Administrative & Support services

shows particular volatility in the monthly series of employment activity, with sharp swings from one-month to the next.

However, contributions to the Y/Y growth from that sector have consistently pushed down on annual GVA growth for the last

10 months; and these swings can be interpreted as an unsettled labour market.

Even with the optimistic signal of easing redundancies in June, the broader picture still remains distinctly mixed. The ONS

notes that consumer demand weakened over the same month, with retail footfall declining (because of the heatwave) as well

as automotive fuel declining (perhaps to make up for the higher fuel prices in the months prior). The labour market therefore

appears somewhat steadier at precisely the point when consumer spending was softening, complicating any straightforward

reading of momentum heading into the summer data.

Taken together, these threads suggest an economy in which headline stability masks underlying fragility: A labour market

seems under pressure. Whether the redundancies come to fruition or not, these inevitably increase uncertainty -- for firms

delaying investment, and for households looking to increase precautionary savings. Neither signal is decisive on its own, but