The UK employment rate has increased by 0.1 percentage points compared to data covering the last quarter, according to data from the Office for National Statistics published today (18 August 2026). However, this is down by 0.2 percentage points on the year.
The research, which focuses on UK labour data between April and June 2026, also found the UK unemployment rate for people aged 16 years and over increased by two percentage points over the year to the end of June 2026, but fell by 0.1 percentage points over the last quarter.
While the estimated number of payrolled employees fell by 0.3% between June last year and June this year, it remained largely unchanged between May 2026 and June 2026. Over the quarter, however, this fell by 0.1%.
The ONS’s early estimate of payrolled employees for July this year has decreased by 0.3% on the year, but has remained unchanged over the month.
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UK economic inactivity for people aged between 16 and 64 remained unchanged over the quarter at 20.9%.
Early estimated job vacancies between May and the end of July 2026 decreased by 0.8% compare to the period between February and the end of April. According to feedback from the ONS’s survey, some small firms are not hiring due to the increase in labour costs and operating expenses.
Annual growth average earnings between April to the end of June stood at 3.5% excluding bonuses and 4.1% including bonuses. The average annual earnings growth for the private sector came in at 6.1% while, for the public sector, it amounted to 2.8%.
Commenting on the data, Neil Birrell, CIO of Premier Miton, said: “At a time when economic growth concerns are coming more into the spotlight in the UK as well as globally, the domestic jobs market continues to see some softening.
“Of some concern is the number of job vacancies remaining at a low with no sign of picking up, which, along with weaker private sector earnings growth, could provide an insight to how corporates are seeing things.”
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David Rees, head of global economics at Schroders, said wage growth continues to ease gradually, while the data broadly shows the UK labour market is stabilising.
“That combination should give the Bank of England cover to keep pushing back against market expectations for rate hikes until the end of the year,” he explained.
“However, with leading indicators of employment starting to improve from weak levels, and fiscal policy likely to turn more expansionary, the UK’s low level of potential GDP growth means the labour market could quickly tighten again next year.
“In that scenario, the Bank will probably be forced to raise interest rates, perhaps in the second half of 2027.”
Richard Carter, head of fixed interest research at Quilter Cheviot, said the UK employment market seems to be “nearing something of a trough”.
“Private jobs surveys have indicated that the labour market has bottomed out, and with a new administration now in charge and the narrative appearing a lot more positive and hopeful, we may see businesses begin to get the confidence to start hiring once again, especially if events in the Middle East remain relatively benign and energy prices don’t rocket again,” he said.
“What Andy Burnham will be hoping to see in the coming months is the start of a sustained reversal. Indeed, youth unemployment in particular has become a worrying statistic for the government, and something Burnham has promised to act upon with an increase in vocational education at younger ages.
“The UK’s demographics are changing significantly enough that the government needs to get more young people into employment, education or training if any sort of economic growth is to be sustained over the long term.”