The UK labour market has shown further signs of weakening, with the number of payrolled employees falling by an estimated 145,000 over the past year and job vacancies dropping to their lowest level outside the Covid period in more than a decade.
New figures published by the Office for National Statistics on Tuesday show an early estimate of 30.2 million payrolled employees in August 2026, down 26,000 on July and 145,000 compared with August last year.
The ONS stressed that the August payroll estimate is provisional and could be revised as more information becomes available. However, it said the number of payrolled employees has generally been falling over the past two years.
Payroll employment falls again
More complete HM Revenue and Customs payroll data for July show employee numbers fell by 101,000 compared with July 2025 and by 19,000 compared with June.
Across the three months from May to July, the number of payrolled employees was 84,000 lower than a year earlier and 39,000 lower than in the previous three-month period.
The ONS said its Real Time Information payroll data currently provide its most reliable measure of employee numbers, while warning that different labour market measures can show contrasting movements because they are compiled in different ways.
Vacancies fall to 702,000
The number of vacancies across the economy also declined.
There were an estimated 702,000 vacancies in the three months from June to August, down 8,000 — or 1.1% — compared with March to May.
Outside the coronavirus pandemic, the last time vacancies were at 702,000 or below was August to October 2014, when there were 701,000.
The ONS said feedback from its Vacancy Survey continued to suggest that some smaller businesses may be holding back recruitment because of increases in labour costs.
Unemployment remains at 4.9%
The UK unemployment rate was estimated at 4.9% in the three months from May to July.
That was unchanged on the previous quarter but 0.2 percentage points higher than a year earlier.
The employment rate for people aged 16 to 64 stood at 75.1%, down 0.1 percentage points on the year and broadly unchanged on the quarter.
Economic inactivity among people aged 16 to 64 was estimated at 20.9%, down slightly both annually and compared with the previous three-month period.
Claimant Count rises
The UK Claimant Count increased in August to an estimated 1.692 million, rising both on the month and on the year.
The ONS cautioned that the latest Claimant Count figure is provisional and can be revised as administrative records are updated.
Wage growth slows
The labour market figures also show a slowdown in earnings growth.
Annual growth in total employee earnings, including bonuses, fell to 3.9% in May to July, down from 4.2% in the previous three-month period.
The ONS said total earnings growth was last below 3.9% in September to November 2020.
Regular earnings excluding bonuses grew by 3.5% and have remained relatively stable over the past five three-month periods following a year of slowing growth.
Private and public sector pay growth diverges
There remains a substantial difference between public and private sector wage growth.
Regular public sector earnings increased by 6.3% annually, compared with 2.9% in the private sector.
The ONS cautioned that public sector pay growth continues to be affected by differences in the timing of pay awards this year.
After adjusting for inflation using CPIH, regular earnings grew by 0.6% in real terms and total earnings by 0.9%.
Public sector employment increases
While payroll employment has been falling overall, the number of people working in the public sector increased.
Public sector employment was estimated at 6.21 million in June, up 11,000 compared with March and 33,000 compared with June 2025.
Meanwhile, the total number of workforce jobs was estimated at 36.7 million in June, down 48,000 from March but 60,000 higher than a year earlier.
Further evidence of a cooling labour market
Taken together, the figures provide further evidence of a labour market that has become less buoyant, with payroll employment falling, vacancies at historically low levels and wage growth slowing.
However, the ONS advises against drawing conclusions from individual monthly movements and recommends focusing on longer-term trends across its different labour market measures.
The August payroll figure in particular remains an early estimate and is likely to be revised when additional PAYE data are received next month.