UK Payrolls Fall by 101,000 in a Year as Vacancies Drop to 702,000
The number of payrolled employees fell by 101,000 between July 2025 and July 2026, the ONS reported on 15 September. Regular pay growth slowed to 3.5%, just 0.8% above CPI inflation.
By Entrepreneur Group · Published · Updated
The UK jobs market cooled further over the summer. The number of employees on payrolls fell by 101,000 (0.3%) between July 2025 and July 2026, and by 19,000 in the month to July, according to the Office for National Statistics, which published the figures on 15 September.
Vacancies fell by 8,000 to 702,000 in June to August 2026, and regular pay growth slowed to 3.5%. In this release the ONS estimated unemployment at 4.9% for May to July, 0.2 percentage points higher than a year earlier.
The key figures
- Unemployment rate: 4.9% in May to July 2026, up 0.2 points on the year and largely unchanged on the quarter.
- Employment rate (16 to 64): 75.1%, down 0.1 points on the year.
- Payrolled employees: down 101,000 on the year to July. The early estimate for August is 30.2 million.
- Vacancies: 702,000 in June to August, down 8,000 (1.1%) on the previous quarter.
- Regular pay, excluding bonuses: up 3.5% on a year earlier. After inflation, that is 0.8% using CPI and 0.6% using CPIH.
- Economic inactivity (16 to 64): 20.9%, down 0.1 points.
Labour market estimates are revised as more data comes in. The ONS's next release, on 20 October, put unemployment at 4.7% for June to August.
A softer market, not a collapse
Employment is broadly stable and inactivity fell slightly, so the overall picture is of a market that is loosening slowly rather than shedding jobs rapidly. The Bank of England's July minutes described the labour market as "loosening" alongside subdued demand.
For employers, slower pay growth and fewer vacancies mean less competition for staff than in recent years. For workers, real pay growth of less than 1% means living standards are improving only slowly, especially as fuel and energy costs rise.
What it means for small employers
This section is editorial guidance.
- Recruitment may be easier. With fewer vacancies, more candidates may apply for each role. Use the chance to hire for attitude and train for skills.
- Pay rises still matter. Real pay growth is low, so staff feel price rises sharply. Non-cash benefits, flexible hours and clear progression can help keep good people.
- Look at hiring support. The Youth Jobs Grant pays employers £3,000 for each eligible 18 to 24-year-old hired from Universal Credit after six months out of work.
- Prepare for new employment rules. Changes under the Employment Rights Act continue to arrive through 2026 and 2027. Review contracts and probation processes now.
Frequently asked questions
What was the UK unemployment rate in September 2026?
The ONS release of 15 September 2026 estimated unemployment at 4.9% for May to July 2026. A later release, on 20 October, put it at 4.7% for June to August.
Are UK job vacancies falling?
Yes. Vacancies fell by 8,000 to 702,000 in June to August 2026, compared with the previous three months.
How fast are UK wages growing?
Regular pay excluding bonuses grew by 3.5% in May to July 2026. After CPI inflation, real pay growth was 0.8%.
Sources
- ONS: Labour market overview, UK: September 2026 (reviewed 27 October 2026)
- Bank of England: Monetary Policy Summary and minutes, July 2026 (reviewed 27 October 2026)