The UK job market remains subdued as rising costs weigh on recruitment, with vacancies falling to their lowest level outside of the pandemic in nearly 12 years, official figures have revealed.
Vacancies fell by 6,000 to 707,000 in the three months to July, their lowest level outside the pandemic since September to November 2014, when they stood at 703,000, according to Office for National Statistics’ (ONS) latest labour market data.
The employment rate rose slightly by 0.1 percentage points to 75.1 per cent for the three months to June, while the number of payrolled employees fell by 78,000 in the year to June.
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James Cockett, senior labour market economist at the CIPD, said the figures outlined “the stark reality of the challenges currently facing employers,” with the labour market showing “very little sign of change, with our forward-looking data showing this is set to continue.”
The ONS said feedback from its vacancy survey suggested some small firms may not be recruiting because of increases in labour costs and other operating expenses.
Employer confidence, Cockett said, remains “at an unprecedented low, putting pressure on the government to stimulate the economy and encourage jobs growth”.
Kevin Fitzgerald, UK managing director at Employment Hero, said: “The labour market needs confidence, and right now small businesses are still being asked to do a lot with very little room to manoeuvre.”
Maxine Bligh, chief membership and innovation officer at the Recruitment and Employment Confederation, similarly said the jobs market needed “a confidence boost to get momentum going”, adding that “many employers are still worried about the cost of hiring and rising operating costs”.
Unemployment remains elevated
Alongside falling vacancies and payroll numbers, unemployment remained higher than the year earlier.
The UK unemployment rate for people aged 16 years and over was estimated at 4.9 per cent in April to June 2026, up 0.2 percentage points on the year but down by 0.1 on the latest quarter.
Economic inactivity amongst people aged 16 to 64 remained broadly unchanged at 20.9 per cent.
Ben Harrison, director of the Work Foundation at Lancaster University, said the UK remained “trapped in a deepening jobs drought”, with youth unemployment among 16 to 24-year-olds at 16.2 per cent and almost three-quarters of a million young people out of work and looking for a job.
The decline in started jobs has been “1.6 times faster than for other vacancies” over the past year, he said, making it harder for young people to get their first foothold in work.
The government must make creating good jobs “in every postcode” a central economic priority, he added, calling for it to deliver on the Employment Rights Act.
Fitzgerald said: “Today’s ONS figures show unemployment remains elevated, while businesses continue to deal with rising costs, more regulation and ongoing economic uncertainty. If we want businesses to hire, we need to make it easier for them to do so.”
For more information, read the CIPD’s report on the changing face of the youth labour market