In the quarter to August 2026, employment rose, unemployment and inactivity decreased, and regular wage growth held firm. The youth unemployment rate dropped below 16% but remained significantly higher than the headline adult rate. Meanwhile, vacancies fell to their lowest level in five years in the quarter to September.
This month’s labour market data sends some encouraging signals, particularly around UK labour market participation, with more people moving into work. The big concern continues to be business hiring caution, which anecdotal employer feedback has linked to the rising risk and cost attached to recruitment, alongside broader economic uncertainty.
The UK employment rate (for people aged 16 to 64 years old) was estimated at 75.3% in the quarter to August 2026, which is up on the quarter and the year. The UK unemployment rate (for people aged 16 and over) was estimated at 4.7% over the same period, representing a fall on the quarter and the year.
The inactivity rate for people aged 16 to 64 was estimated at 20.9% in the three months to August 2026, which is down on the quarter and the year. Early estimates for the number of UK vacancies in the quarter to September 2026 predict a decrease of 21,000 (-2.9%) to 691,000. This is the first time that the total has been below 700,000 since February to April 2021.
Estimates for payrolled employees in the UK fell by 111,000 (-0.4%) between August 2025 and August 2026, but it remained largely unchanged between July and August 2026, increasing by 1,000 (0.0%). This is based on administrative data from HM Revenue and Customs (HMRC). The early estimate of payrolled employees for September 2026 decreased by 66,000 (-0.2%) on the year, but remained largely unchanged between August and September 2026, increasing by 13,000 (0.0%) to 30.3 million. Figures for September 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 3.7% in the three months to August 2026, and annual growth in total earnings (including bonuses) was the same. 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 0.6% and 0.7%, respectively, across the same period.
At the Autumn Budget later this month, businesses will be looking to government to remove the barriers that are making it harder for them to grow, invest and hire. But there are also measures that government can take beyond the Budget which would help firms to invest in people and skills. This includes finding a more workable landing zone for guaranteed hours and reasonable notice provisions through tripartite dialogue.
