In the quarter to February 2026, the unemployment level and rate fell, employment levels rose slightly but the employment rate decreased, and wage growth continued to slow. There was also a notable uptick in economic inactivity, and vacancies have fallen even further.
Therefore, this month’s data paints a slightly different picture compared to recent months, with a surprise fall in unemployment. But vacancies and payroll data suggest this is not due to a big improvement in firms’ hiring intentions, and that many businesses remain cautious about recruiting and creating new jobs. Inactivity data also indicates that not all unemployed people have necessarily found a job.
The UK employment rate (for people aged 16 to 64 years old) was estimated at 75.0% in the period between December 2025 and February 2026, which is slightly down on the quarter but unchanged on the year. The UK unemployment rate (for people aged 16 and over) was estimated at 4.9% in the quarter to February 2026, which is a decrease on the quarter and increase on the year.
The inactivity rate for people aged 16 to 64 years old was estimated at 21.0% in the three months to February 2026, which is up on the quarter but down on the year. The provisional estimate for the number of vacancies in the UK economy in the quarter to March 2026 is 711,000. This is the lowest level of vacancies since the quarter to April 2021.
Estimates for payrolled employees in the UK fell by 74,000 (-0.2%) between February 2025 and February 2026, and decreased by 6,000 (0.0%) between January and February 2026. The early estimate of payrolled employees for March 2026 decreased by 65,000 (-0.2%) on the year, and by 11,000 (0.0%) on the month, to 30.3 million. The March 2026 estimate should be treated as a provisional estimate and is likely to be revised when more data is received next month.
Annual growth in employees' average regular earnings (excluding bonuses) in Great Britain was 3.6% in the three months to February 2026, and annual growth in total earnings (including bonuses) was 3.8%. Annual growth in real terms (adjusted for inflation using the Consumer Prices Index including owner occupiers' housing costs (CPIH)), for regular pay and total pay stood at 0.2% and 0.4%, respectively, across the same period.
The labour market's role in the growth agenda cannot be overstated, determining both the quality and quantity of goods and services that can be produced, and how many people will need to rely on welfare support where they aren't able to access quality jobs and training opportunities. This month’s data highlights that hiring caution continues to be prevalent across the UK labour market, and that factors such as cost and broader economic uncertainty are impacting businesses’ ability to recruit.
Moreover, firms will be looking ahead to the King's Speech next month for signs that government is taking the problem of rising business costs seriously. This could be achieved by a firm commitment not to increase the cost of doing business through policies that have not yet been committed to, and delivering a Growth and Skills Levy roadmap that provides businesses with the confidence to invest in people and skills.
