In the quarter to May 2026, employment levels rose, unemployment and economic inactivity fell, vacancy levels showed signs of stabilising, and nominal regular wage growth remained at its lowest level in over five years. Concerningly high youth unemployment levels have also persisted.
Therefore, while there are signs of UK labour market resilience, unemployment is still higher than the same period a year ago. Moreover, job creation across many sectors has stayed subdued. This suggests that, despite many businesses remaining committed to recruitment, barriers to hiring persist, leaving many people who want to work struggling to find employment.
The UK employment rate (for people aged 16 to 64 years old) was estimated at 75.1% in the period between March 2026 and May 2026, which is slightly up on the quarter but down on the year. The UK unemployment rate (for people aged 16 and over) was estimated at 4.9% over the same period, representing a fall on the quarter and a rise on the year.
The inactivity rate for people aged 16 to 64-years-old was estimated at 20.9% in the three months to May 2026, reflecting a decrease on the quarter and year. Early estimates for the number of UK vacancies in the quarter to June 2026 suggest a decrease of 7,000 (-0.9%) to 712,000.
Estimates for payrolled employees in the UK fell by 85,000 (-0.3%) between May 2025 and May 2026. However, it was largely unchanged on the month, increasing by 3,000 (0.0%) between April and May 2026. This is based on administrative data from HM Revenue and Customs (HMRC). The early estimate of payrolled employees for June 2026 decreased by 71,000 (-0.2%) on the year, but was largely unchanged on the month, decreasing by 4,000 (0.0%) to 30.3 million. Figures for June should be treated as provisional estimates and are likely to be revised when more data is received next month.
Annual growth in employees' average regular earnings (excluding bonuses) in Great Britain was 3.4% in the three months to May 2026, and annual growth in total earnings (including bonuses) was 4.3%. 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 0.3% and 1.1%, respectively, across the same period.
A change in leadership presents a valuable opportunity for government to reflect on where labour market policy has been effective and where a different approach may be needed. This should include working closely with businesses to identify and address the unintended consequences attached to recent and upcoming policy decisions. For example, firms operating in England have raised concerns about the impact of Growth and Skills Levy reforms – including defunding and co-investment changes – on their ability to deliver apprenticeship opportunities.
