ONS Labour Market Overview - July 2026
As of July 2026, we’ve reviewed the latest UK labour market data from the Office for National Statistics (ONS), covering the period from March to May 2026, with early indicators for June 2026. The latest figures suggest the labour market remains relatively stable, although hiring demand continues to soften and payroll employment remains below year-ago levels.
Monitoring these trends helps businesses make informed decisions around recruitment, workforce planning and pay strategy. While the Labour Force Survey (LFS) continues to benefit from improvements to data collection, the ONS advises that some volatility remains within the estimates and recommends focusing on longer-term movements rather than month-to-month fluctuations.
Key Findings
Payrolled Employees
HMRC payroll data shows that payrolled employment remained broadly flat during May 2026, increasing by just 3,000 compared with April. However, compared with the same month last year, the number of payrolled employees was down by 85,000 (0.3%).
Looking across the March to May 2026 period, payrolled employee numbers declined by 90,000 (0.3%) year-on-year and were 30,000 lower than the previous quarter.
The provisional estimate for June 2026 suggests little change in payroll employment, with a small monthly decrease of 4,000 bringing the total to an estimated 30.3 million. Compared with June 2025, this represents a decline of 71,000 employees. As with all early estimates, these figures are subject to revision.
Employment and Unemployment
The employment rate for people aged 16 to 64 was estimated at 75.1% between March and May 2026. This represents a slight improvement compared with the previous quarter, although it remains marginally below the level recorded a year earlier.
The unemployment rate was estimated at 4.9%, edging down on the quarter but remaining above the same period in 2025.
Economic inactivity fell slightly to 20.9%, showing modest improvement both on the quarter and compared with a year ago.
Vacancies and Claimant Count
Vacancy levels continued to ease, although at a slower pace than in previous months. Early estimates for April to June 2026 indicate that vacancies fell by 7,000 (0.9%) to 712,000 compared with the previous rolling quarter.
The Claimant Count increased slightly during June but remained below the level seen a year earlier, with an estimated 1.689 million people claiming unemployment-related benefits. As with other early labour market indicators, this figure remains provisional.
Earnings Growth
Average earnings continued to rise, although growth remained relatively moderate. Annual regular pay increased by 3.4%, while total pay, including bonuses, rose by 4.3% during the March to May 2026 period.
Public sector regular earnings grew by 5.5%, compared with 2.9% in the private sector. The ONS notes that public sector pay growth continues to reflect differences in the timing of annual pay awards.
After adjusting for inflation, earnings growth remained positive but modest. Using CPIH, regular pay increased by 0.3% in real terms, while total pay rose by 1.1%. Using CPI, real regular earnings increased by 0.4% and total earnings by 1.3%.
Labour Disputes
Industrial action remained relatively subdued in May 2026, with an estimated 26,000 working days lost because of labour disputes across the UK.
Overall, the latest figures suggest the UK labour market remains resilient, but recruitment activity continues to cool gradually. Payroll employment remains below last year’s levels, vacancies have continued to edge down, and pay growth has stabilised. While employment and unemployment rates have changed little overall, employers are likely to continue taking a measured approach to hiring as market conditions remain balanced.
Source: Labour market overview, UK – Office for National Statistics (ONS)
