Britain's labour market weakened as vacancies fell and payroll employment declined despite modest wage growth
Britain's unemployment rate has hit 4.9 per cent in the three months to May 2026.
The Office for National Statistics (ONS) said the rate increased by 0.2 percentage points compared with the same period a year earlier.
The figures paint a concerning picture for the UK labour market, with HM Revenue and Customs (HMRC) payroll data showing the number of employees on company books fell by 85,000, or 0.3 per cent, between May 2025 and May 2026.
On a quarterly basis, unemployment edged down by 0.1 percentage points compared with the previous three-month period.
Month-on-month payroll numbers were broadly unchanged, increasing by just 3,000 between April and May.
The latest data is likely to add to concerns about the strength of the jobs market heading into the second half of the year.
Vacancies also continued to decline, falling by 7,000 in the April to June quarter to an estimated 712,000, representing a 0.9 per cent drop compared with the previous three months.
The employment rate for working-age adults stood at 75.1 per cent, down by 0.1 percentage points over the year, although it increased by the same amount on the quarter.
Liz McKeown, ONS director of economic statistics, said: “The latest data show a relatively steady labour market picture overall, though some measures continue to suggest softening.”
She added: “Vacancies fell again over the quarter, but by less than in recent periods.
“The latest decrease was driven mainly by smaller businesses, where labour and operating costs were cited as factors in not taking on new staff.”
The ONS reported that private‑sector pay growth has slipped below three per cent for the first time since 2020.
Vacancies dropped by 7,000 in the three months to June, falling to 712,000, following a 19,000 decrease in the previous quarter.
The ONS said the downturn was led by small businesses, which recorded an 8,000 fall in open roles, partly offset by rising vacancies among medium‑sized companies.
A Government spokesman said: "While it's welcome that unemployment has fallen slightly, the reality is too many young people are still locked out of work.
“For too long, Governments have paid for failure rather than invested in people's success.
"We’re determined to turn that around by creating real opportunities for young people, reforming education so everyone has a clear path to a good job and providing the support people need to stay and get on in work.”
Despite the fall in private sector earnings growth, overall regular wage growth remained unchanged at 3.4 per cent in the quarter to May, while earnings continue to outstrip inflation, up 0.4 per cent with the Consumer Prices Index taken into account.
