As of June 2026, we’ve reviewed the latest UK labour market data from the Office for National Statistics (ONS), covering the period from February to April 2026, with early indicators for May 2026. The latest release suggests that the labour market remains resilient, but signs of softer hiring demand continue to emerge, particularly through falling vacancies and lower payroll employment levels.

These insights are important for employers as they navigate workforce planning, recruitment activity and pay decisions in an evolving economic environment. While the Labour Force Survey (LFS) continues to benefit from methodological improvements, the ONS advises that some volatility remains in the data and that longer-term trends should be prioritised over short-term movements.

---

Key Findings

Payrolled Employees

HMRC payroll data indicates that the number of payrolled employees continues to trend lower than a year ago. In April 2026, there were 138,000 fewer payrolled employees than in April 2025, representing a decline of 0.5%. Payroll employment also fell by 53,000 between March and April 2026.

Across the February to April 2026 period, payrolled employee numbers were down by 103,000 (0.3%) compared with the same period a year earlier and slipped by 31,000 (0.1%) on the quarter.

The provisional estimate for May 2026 suggests that payroll employment has stabilised somewhat, increasing by 2,000 on the month to 30.3 million. However, it remains 119,000 lower than a year ago. As with all early estimates, these figures are subject to revision.

Employment and Unemployment

The employment rate for people aged 16 to 64 was estimated at 75.0% in February to April 2026, remaining broadly unchanged both on the year and compared with the previous quarter.

The unemployment rate stood at 4.9%, lower than the previous quarter but still above levels seen a year ago. This suggests that while conditions have improved slightly in recent months, the labour market remains less tight than it was during 2025.

Economic inactivity was estimated at 21.0%, increasing slightly on the quarter but remaining below the level recorded a year earlier.

Vacancies and Claimant Count

Vacancy numbers continued their gradual downward trend. Early estimates for March to May 2026 show vacancies falling by 19,000 (2.6%) to 707,000. This marks the lowest vacancy level since early 2021 and suggests that employers remain cautious about expanding headcount.

The Claimant Count increased both on the month and compared with the same period last year, reaching an estimated 1.712 million in May 2026. As with other labour market indicators, this figure is provisional and may be revised in future releases.

Workforce Jobs and Public Sector Employment

The estimated number of workforce jobs in the UK reached 36.8 million in March 2026, increasing by 256,000 (0.7%) from the previous quarter.

Growth was driven primarily by self-employment, which rose by 177,000 (4.4%), while employee jobs increased by 81,000 (0.3%). Despite this quarterly improvement, workforce jobs remain slightly below levels seen a year ago.

Public sector employment was estimated at 6.19 million, showing little change from the previous quarter but remaining 37,000 higher than a year earlier.

Earnings Growth

Pay growth remained positive but continued to moderate. Annual growth in regular earnings was 3.4%, while total earnings, including bonuses, increased by 4.4% in the three months to April 2026.

Public sector regular pay growth was stronger at 5.1%, compared with 2.9% in the private sector. The ONS notes that public sector earnings continue to be influenced by differences in the timing of annual pay awards.

When adjusted for inflation using CPIH, regular pay increased by 0.1% in real terms, while total pay rose by 1.2%. Using CPI, real regular earnings increased by 0.3% and total earnings by 1.3%.

Labour Disputes

Industrial action increased significantly in April 2026, with an estimated 120,000 working days lost across the UK. Most of the disruption came from the health and social work sector, reflecting the impact of doctors’ strikes in England.

---

Overall, the latest figures point to a labour market that remains relatively stable but continues to cool gradually. Payroll employment and vacancies have both declined, while earnings growth has eased further. Although employment levels remain steady, the continued fall in vacancies and rise in claimant numbers suggest employers are taking a more cautious approach to recruitment as 2026 progresses.

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