UK Unemployment Falls to 4.7% but Payrolls and Vacancies Keep Shrinking
UK unemployment was 4.7% in June to August 2026, down 0.1 points, while payrolled employees were 111,000 lower than a year earlier and vacancies fell to 691,000. Regular pay growth slowed to 3.7%.
By Entrepreneur Group · Published · Updated
The UK unemployment rate was 4.7% in the three months to August 2026, down 0.1 percentage points on both the quarter and the year, the Office for National Statistics reported on 20 October. But other measures point to a labour market that is still cooling: there were 111,000 fewer payrolled employees in August than a year earlier, and vacancies fell to 691,000.
For employers, that mix means recruiting may be a little easier, while pay growth is slowing towards the rate of inflation.
The main figures
- Unemployment: 4.7% in June to August 2026.
- Employment rate: 75.3% for people aged 16 to 64, up 0.2 points on the year.
- Economic inactivity: 20.9%, down 0.2 points on the year.
- Payrolled employees: down 111,000 (0.4%) on the year in August. The early estimate for September shows 30.3 million, down 66,000 on the year but up 13,000 on the month.
- Vacancies: 691,000 in July to September, down 21,000 on the quarter and 37,000 on the year.
- Pay: regular pay grew 3.7% a year, and total pay including bonuses also 3.7%, down from 3.9%.
After inflation, pay is still rising, but only just. Using CPI, real regular pay grew 0.8% and real total pay 0.9%. Using CPIH, the figures were 0.6% and 0.7%.
How this fits the Bank of England's view
At its September meeting, the Bank of England described labour demand as weak and said there was still "a margin of slack in the labour market", although that slack had probably stabilised, according to its minutes. October's figures are broadly consistent with that: unemployment edged down, while payrolls and vacancies continued to fall.
Slowing pay growth matters to the Bank because wages feed into services prices. With CPI inflation expected to rise into early 2027 because of energy costs, the Bank is watching for signs that higher prices push wage demands up. These figures do not yet show that.
What it means for employers
This section is editorial guidance.
- Recruitment. Fewer vacancies across the economy means less competition for candidates in many roles. It may be a good time to fill hard-to-hire positions, but specialist skills can still be scarce.
- Pay reviews. Average regular pay is growing at 3.7% while CPI inflation was 3.1% in August and is expected to rise. Staff whose pay is frozen are seeing a real-terms cut. Be open about what you can afford.
- Rule changes. From 1 January 2027, the qualifying period for unfair dismissal falls to six months under the Employment Rights Act. Build proper probation reviews into any hiring you do now.
The next labour market release is due on 17 November 2026.
Frequently asked questions
What is the UK unemployment rate in October 2026?
The latest ONS figure, published on 20 October 2026, puts unemployment at 4.7% for June to August 2026, down 0.1 percentage points on the quarter and the year.
How fast are UK wages growing?
Regular pay, excluding bonuses, grew 3.7% a year in June to August 2026. After CPI inflation, real regular pay grew 0.8%.
How many job vacancies are there in the UK?
The ONS estimates 691,000 vacancies in July to September 2026, down 21,000 on the previous quarter and 37,000 on a year earlier.
Sources
- ONS: Labour market overview, UK: October 2026 (20 October 2026) (reviewed 27 October 2026)
- Bank of England: Monetary Policy Summary and minutes, September 2026 (reviewed 27 October 2026)