In the quarter to July 2026, headline employment and unemployment held broadly as they were, and economic inactivity fell. Meanwhile, youth unemployment climbed to 16.4%, vacancies fell again, and regular pay growth held steady.
This month’s labour market data shows the labour market continues to be subdued, with young people especially bearing the brunt of a weaker hiring environment amid employer caution to hire.
The UK employment rate (for people aged 16 to 64 years old) was estimated at 75.1% in the quarter to July 2026, which is unchanged 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, which is also unchanged on the quarter but a rise on the year.
The inactivity rate for people aged 16 to 64 was estimated at 20.9% in the three months to July 2026, which is down on the quarter and the year. Early estimates for the number of UK vacancies in the quarter to August 2026 predict a decrease of 8,000 (-1.1.%) to 702,000.
Estimates for payrolled employees in the UK fell by 101,000 (0.3%) between July 2025 and July 2026, and decreased by 19,000 (0.1%) between June and July 2026. This is based on administrative data from HM Revenue and Customs (HMRC). The early estimate of payrolled employees for August 2026 decreased by 145,000 (0.5%) on the year, and decreased by 26,000 (0.1%) between July and August 2026 to 30.2 million. Figures for August should be treated as provisional estimates and are likely to be revised when more data are received next month.
Annual growth in employees' average regular earnings (excluding bonuses) in Great Britain was 3.5% in the three months to July 2026, and annual growth in total earnings (including bonuses) was 3.9%. 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 0.9%, respectively, across the same period.
With employer apprehension about the cost of employment still high, it is vital that the Autumn Budget and the enactment of the Employment Rights Act do not dent job creation and investment further. Resuming a tripartite dialogue on the outstanding areas of the Make Work Pay package and tax measures aimed at easing employment, energy and business rates costs are vital.
