UK Unemployment Falls to 4.7 Percent as Vacancies Slip Below 700,000, First Time Since 2021
The UK unemployment rate fell to 4.7 percent in the three months to August, down 0.1 percentage points on both the quarter and the year. The employment rate rose 0.2 points to 75.3 percent. Figures from the Office for National Statistics, published at 06:00 GMT on 20 October, also showed vacancies falling to 691,000 in July to September. That is the first reading below 700,000 since February to April 2021.
Total pay growth cooled. Including bonuses, pay rose 3.7 percent on the year, down from 3.9 percent. It was last lower in August to October 2020, at 2.8 percent. Regular pay also grew 3.7 percent.
More people in work, but only one change clears the noise
UK headline labour measures, June to August 2026
| Measure | Level or rate | Change on quarter | Change on year |
|---|---|---|---|
| Employment, 16 and over (thousands) | 34,577 | +102 | +356 |
| Employment rate, 16 to 64 (%) | 75.3 | +0.2 | +0.2 |
| Unemployment, 16 and over (thousands) | 1,712 | -47 | -26 |
| Unemployment rate (%) | 4.7 | -0.1 | -0.1 |
| Economically inactive, 16 to 64 (thousands) | 9,091 | -16 | -22 |
| Inactivity rate, 16 to 64 (%) | 20.9 | -0.1 | -0.2 |
| Total weekly hours (millions) | 1,105.2 | +3.9 | +16.5 |
| Redundancies (thousands) | 113 | +5 | 0 |
Labour Force Survey, seasonally adjusted. Changes in rates are in percentage points. The redundancy rate was 3.8 per 1,000 employees.
On our calculation, the published levels put the rate at 4.72 percent: 1,712,000 unemployed in a labour force of 36,289,000. On the same basis, people in work averaged 31.96 hours a week each.
The survey still carries wide error bands, and the release publishes them. The quarterly fall of 47,000 in unemployment sits inside a sampling range of plus or minus 101,000. The annual gain of 356,000 in employment is larger than its range of plus or minus 286,000. On our reading, it is the only change in the table with a published range that clears it.
The previous release, on 15 September, put unemployment at 4.9 percent for May to July, as first published. It put the employment rate at 75.1 percent.
Tax-system payroll data tell a softer story. Payrolled employees fell 92,000 on the year in June to August, a gap of 448,000 against the survey’s employment gain on our calculation. The survey also counts the self-employed. Its rise in part-time workers came from self-employed people working part-time.
The flash estimate for September put payrolled employees at 30.3 million. That was up 13,000 on the month but down 66,000 on the year. August was revised from a fall of 26,000 to a rise of 1,000. Over the year, administrative and support services had the largest rise, adding 66,000 employees. Wholesale and retail had the largest fall, at 71,000. The number of payrolled employees aged 65 and over grew by 71,000.
The claimant count reached 1.701 million in September, up on the month and the year. It has been rising since July 2026.
The smallest firms cut vacancies by 21.1 percent in a quarter
UK vacancy measures, latest period
| Measure | Latest | Change on quarter | Change on year |
|---|---|---|---|
| Vacancies, all firms | 691,000 | -21,000 | -37,000 |
| Vacancies, firms with 1 to 9 employees | 77,000 | -21,000 | -38,000 |
| Vacancy rate (%) | 2.1 | -0.1 | -0.1 |
| Unemployed people per vacancy | 2.4 | -0.1 | 0.0 |
Vacancy Survey, July to September 2026, seasonally adjusted. The unemployed per vacancy ratio is for June to August 2026, and its changes are our calculation. All vacancies fell 2.9 percent on the quarter and 5.1 percent on the year; at the smallest firms, the falls were 21.1 percent and 32.8 percent.
Firms with 1 to 9 employees cut 21,000 openings over the quarter. Over the year, the smallest firms shed 38,000 openings, more than the 37,000 lost across the whole economy. These businesses now hold 11.1 percent of all vacancies on our calculation. Their 77,000 openings are the lowest for that size band since June to August 2013. The release said smaller firms may not be recruiting because of increases in labour costs.
Outside the pandemic, vacancies were last this low in July to September 2014, at 686,000. The latest level is 5,000 above that mark, on our calculation. The 15 September release put June to August vacancies at 702,000, as first published.
Vacancies fell in 14 of 18 industries over the quarter. Construction openings fell 20.5 percent, a drop of 7,000. The release said the quarterly fall remains within its confidence interval of approximately plus or minus 32,000 vacancies.
Real pay still rising, unevenly
Great Britain pay growth, annual, three months to August 2026 versus the previous three months
| Measure | June to August (%) | May to July (%) |
|---|---|---|
| Total pay, whole economy | 3.7 | 3.9 |
| Real regular pay, CPIH | 0.6 | 0.6 |
| Real total pay, CPIH | 0.7 | 1.0 |
| Real total pay, CPI | 0.9 | 1.1 |
| Public sector, regular | 6.3 | 6.3 |
| Private sector, regular | 3.0 | 2.9 |
| Private sector, total | 3.1 | 3.3 |
| Wholesale, retail, hotels and restaurants, regular | 2.7 | 3.1 |
Average weekly earnings, Great Britain, seasonally adjusted. Real regular pay on CPI was 0.8 percent in June to August.
The public sector gap is wide. Public regular pay growth of 6.3 percent is 3.3 points above the private sector’s 3.0 percent on our calculation. The release says two pay rises falling within the year are inflating the annual rate. Pay awards for 2026 came in April for Agenda for Change staff, in June for doctors and dentists under their review body, and in September for resident doctors.
Construction had the slowest regular pay growth, at 1.1 percent. That is 2.0 points below average CPIH inflation of 3.1 percent, on our calculation. Regular pay in finance and business services grew 3.3 percent, the fastest after the public sector.
Average weekly earnings were 757 pounds for total pay and 707 pounds for regular pay in August. The 50 pound difference is 6.6 percent of total pay on our calculation. Tax data show faster growth. On early estimates, median monthly pay was 2,660 pounds in September, up 4.4 percent on the year. That is 0.7 points above regular pay growth on our calculation, though the two series differ in period and method. Finance and insurance paid a median of 4,332 pounds a month. That is 3 times the 1,444 pounds in accommodation and food, on our calculation. London’s median of 3,119 pounds is 17.3 percent above the UK figure, on our calculation.
The regional split
Regional labour rates, June to August 2026
| Region | Employment rate (%) | Unemployment rate (%) | Inactivity rate (%) |
|---|---|---|---|
| United Kingdom | 75.3 | 4.7 | 20.9 |
| London | 74.5 | 6.6 | 20.1 |
| West Midlands | 72.5 | 5.7 | 22.8 |
| North East | 70.5 | 4.7 | 25.5 |
| South West | 79.2 | 3.8 | 17.5 |
| Northern Ireland | 72.5 | 2.1 | 25.9 |
Labour Force Survey, seasonally adjusted. Employment and inactivity rates are for ages 16 to 64; unemployment for 16 and over.
London’s unemployment rate is 3.1 times Northern Ireland’s on our calculation, a spread of 4.5 points. The South West’s employment rate is 8.7 points above the North East’s, on our calculation. In September, payrolled employees were down on the year in every region except Northern Ireland, where they rose 0.9 percent. London had the steepest fall, at 0.7 percent.
Why it matters: The Bank of England’s last decision, published on 17 September, said more people were looking for work than there were jobs available, so employers may feel less pressure to raise salaries. This release fits that picture. In June to August there were 2.4 unemployed people for every vacancy. Total pay growth is the slowest in nearly six years. Pay is still beating prices, though. Bank Rate stands at 3.75 percent. That is 0.65 points above the 3.1 percent inflation rate the Bank cites, on our calculation.
Outlook: September consumer price inflation is due on 21 October at 06:00 GMT. The next Bank Rate decision is due on 5 November. The next labour market release comes on 17 November.
Sources: Office for National Statistics, Bank of England, The Edge.
