UK unemployment falls to 4.7%, but job vacancies keep shrinking

The ONS published new labour market data on Tuesday 20 October 2026. The unemployment rate for June–August was 4.7%. That is 0.1 percentage points lower than a quarter and a year earlier. The employment rate for people aged 16–64 rose to 75.3%.

Pay is growing more slowly. Regular pay (excluding bonuses) was 3.7% higher than a year earlier — the same for six consecutive periods. Pay including bonuses also rose by 3.7% (previously 3.9%). After CPI inflation, real growth in regular pay is only 0.8%. Private-sector pay is rising by 3.0%, public-sector pay by 6.3%.

Firms are looking for staff less often. There were about 691,000 vacancies in July–September, 21,000 fewer than the previous quarter and 37,000 fewer than a year ago. The ONS links the fall to smaller firms limiting recruitment because of higher labour costs. The number of payrolled employees (PAYE) fell by 92,000 year on year. The Claimant Count rose to 1.701 million in September (provisional). The next ONS data are due on 17 November 2026.

Editorial comment

The fall in unemployment looks good, but the rest of the data show a market that is standing still. Fewer vacancies and slower pay rises signal that small firms are saving on hiring. For employers it means somewhat easier recruitment. For employees — a weaker position in pay negotiations. The Bank of England will look at these figures for its rate decision on 5 November; Wednesday’s inflation data will be just as important.

What to do

• Employers: compare your rates with the market — average private-sector pay growth is about 3%.
• When planning to hire, calculate the full cost of an employee (NI contributions, pension, holiday).
• Employees: before asking for a pay rise, check the latest pay data for your sector.
• Follow Wednesday’s inflation data (21 October) and the Bank of England decision on 5 November.

What do you think?

Do you feel this in your business? Tell us in the comments below the article. We will cover the most interesting views in future editions.

Sources

• ONS: Labour market overview, UK, October 2026
• Financial News: unemployment 4.7%, pay +3.7%
• Personnel Today: labour market, October 2026

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