ONS Labour Market Overview - August 2026

As of August 2026, we’ve reviewed the latest UK labour market figures from the Office for National Statistics (ONS), covering April to June 2026, alongside early payroll and vacancy estimates extending into July. The latest data presents a relatively steady employment picture, but continued weakness in payroll numbers and historically low vacancy levels suggest employers remain cautious about recruitment.

These trends provide important context for workforce planning, recruitment strategies and pay decisions. The ONS continues to advise caution when interpreting short-term movements in Labour Force Survey (LFS) data, with longer-term trends and supporting indicators such as PAYE, vacancies and the Claimant Count providing a more rounded view of the market.

Key Findings

Payrolled Employees

HMRC payroll data indicates that employee numbers remain below last year’s levels. There were 78,000 fewer payrolled employees in June 2026 than in June 2025, representing a decline of 0.3%. Month-on-month movement was limited, with payroll employment decreasing by 13,000 between May and June.

Across the April to June period, payrolled employee numbers were 86,000 (0.3%) lower than a year earlier and declined by 37,000 (0.1%) compared with the previous quarter.

Early estimates for July suggest this pattern continued, with payrolled employment falling slightly by 13,000 on the month to 30.3 million. This leaves employee numbers 94,000 below July 2025. The July estimate remains provisional and may change as additional information becomes available.

Employment and Unemployment

The employment rate for people aged 16 to 64 stood at 75.1% between April and June 2026. This represents a small quarterly improvement of 0.1 percentage points, although the rate remains 0.2 percentage points below the same period last year.

Unemployment was estimated at 4.9%. While this is slightly lower than the previous quarter, it remains 0.2 percentage points higher year-on-year.

Economic inactivity was unchanged at 20.9%, showing little movement either quarterly or compared with the same period in 2025.

Vacancies and Claimant Count

Hiring demand remains one of the clearest areas of weakness in the latest figures. Vacancies fell by 6,000 (0.8%) in May to July 2026, bringing the estimated total to 707,000.

Although vacancy levels have changed relatively little since the beginning of 2026, they remain historically subdued. Outside of the COVID-19 pandemic period, vacancies were last at or below this level in 2014. Feedback gathered by the ONS also suggests rising labour and operating costs may be discouraging some smaller businesses from recruiting.

Meanwhile, the Claimant Count fell both monthly and annually in July, reaching an estimated 1.665 million. The latest figure remains provisional and may be revised.

Earnings Growth

Average earnings continued to grow, with regular pay increasing by 3.5% annually and total pay, including bonuses, rising by 4.1% during April to June 2026.

There remains a notable difference between public and private sector wage growth. Regular earnings increased by 6.1% in the public sector compared with 2.8% in the private sector, although differences in the timing of public sector pay awards continue to influence the comparison.

Once inflation is taken into account, workers continued to see modest increases in purchasing power. Using CPIH, regular earnings grew by 0.5% in real terms and total earnings by 1.1%. Using CPI, the increases were 0.7% and 1.3% respectively.

Labour Disputes

An estimated 47,000 working days were lost to labour disputes across the UK in June 2026, representing an increase compared with May.

Labour Market Outlook

Overall, the latest data points to a UK labour market that remains stable in headline terms but subdued beneath the surface. Employment has edged higher on the quarter and unemployment has eased slightly, yet payroll numbers remain below last year’s levels and vacancies continue to sit at historically low levels.

For employers, the figures suggest recruitment conditions remain cautious rather than contracting sharply. With businesses continuing to manage labour costs and wider operating pressures, hiring decisions are likely to remain measured as we move through the second half of 2026.

Source: Labour market overview, UK – Office for National Statistics (ONS)