ONS Labour Market Overview - September 2026

As of September 2026, we’ve reviewed the latest UK labour market figures from the Office for National Statistics (ONS), covering May to July 2026 alongside early indicators for August. The latest data points to continued caution across the recruitment market, with payroll employment declining, vacancies edging lower and earnings growth showing signs of moderation.

Headline employment indicators remain relatively stable, but the underlying figures suggest businesses are continuing to take a measured approach to hiring. For employers and HR teams, these trends provide useful context when considering recruitment activity, workforce planning and pay strategies for the remainder of 2026.

Key Findings

Payrolled Employees

HMRC Real Time Information indicates that payroll employment weakened further during the summer.

The number of payrolled employees fell by 19,000 between June and July 2026 and was 101,000 (0.3%) lower than in July 2025.

Across the May to July period, employee numbers declined by 39,000 (0.1%) compared with the previous quarter and were 84,000 (0.3%) below the same period a year earlier.

Early estimates suggest this downward movement continued into August. Payrolled employment decreased by a further 26,000 on the month to approximately 30.2 million, leaving the total 145,000 (0.5%) below August 2025. The August figures remain provisional and could be revised as further information becomes available.

Employment and Unemployment

The headline employment picture remained broadly unchanged during May to July 2026.

The employment rate for people aged 16 to 64 stood at 75.1%, little changed from the previous quarter but 0.1 percentage points below the level recorded a year ago.

Unemployment remained at 4.9%. Although there was little quarterly movement, the rate was 0.2 percentage points higher than a year earlier.

Economic inactivity decreased slightly to 20.9%, falling by 0.1 percentage points both quarterly and annually.

Together, these figures indicate relatively limited movement in the headline rates, despite signs of greater softness elsewhere in the labour market.

Vacancies and Claimant Count

Recruitment demand continued to ease during the latest period.

There were an estimated 702,000 vacancies between June and August 2026, down by 8,000 (1.1%) compared with March to May. Vacancy numbers have moved relatively little throughout 2026 but are now 16,000 lower than at the beginning of the year.

Outside the COVID-19 pandemic period, vacancies were last at or below their current level in 2014. Feedback collected through the ONS Vacancy Survey also indicates that higher labour costs continue to influence recruitment decisions among some smaller businesses.

Meanwhile, the Claimant Count increased both monthly and annually in August to an estimated 1.692 million. This remains a provisional figure and may be revised.

Earnings Growth

Regular earnings growth remained at 3.5% during May to July 2026, continuing a relatively stable run following the slowdown in wage growth experienced previously.

Total earnings, including bonuses, increased by 3.9% annually, down from 4.2% in the previous three-month period. This represents one of the lowest rates of total earnings growth recorded in recent years.

The difference between public and private sector pay growth remained substantial. Regular earnings increased by 6.3% in the public sector compared with 2.9% in the private sector, although variations in the timing of public sector pay awards continue to affect this comparison.

After accounting for inflation using CPIH, regular pay increased by 0.6% in real terms and total pay by 0.9%. Using CPI, real regular earnings grew by 0.8%, while total earnings increased by 1.1%.

Workforce Jobs

The number of workforce jobs was estimated at 36.7 million in June 2026, representing a quarterly decrease of 48,000 (0.1%).

Self-employment jobs accounted for much of the reduction, falling by 43,000, while the number of employee jobs was broadly unchanged.

The annual picture was slightly more positive, with total workforce jobs increasing by 60,000 (0.2%). Employee jobs grew by 46,000 over the year, while self-employment remained slightly below its previous level.

Public Sector Employment

Public sector employment continued to increase, reaching an estimated 6.21 million in June 2026.

This represents an increase of 11,000 (0.2%) compared with March and 33,000 (0.5%) compared with June 2025.

Labour Market Outlook

The latest figures present a labour market where headline employment levels remain steady, but recruitment demand continues to show signs of restraint.

Falling payroll numbers, historically subdued vacancies and slower total earnings growth all point towards a more cautious environment for hiring. At the same time, unemployment has remained stable and real earnings continue to record modest growth.

For employers, the data suggests that competition and recruitment conditions may vary considerably between sectors and skills. With labour costs continuing to influence hiring decisions, businesses are likely to remain selective when expanding their workforce as the final months of 2026 approach.

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