EL7.AI
ForexMedium•20 October 2026•
4 min read

UK unemployment at 4.7% as vacancies fall and wage growth slows

Key Facts

1Britain's unemployment rate stood at 4.7% in June–August 2026.
2Vacancies fell to 691,000 in July–September 2026, a quarterly decline of 21,000, or 2.9%.
3Payroll employment fell by 66,000 year on year, according to the preliminary September estimate.
4Annual total pay growth slowed to 3.7% from 3.9% in the previous three-month period.
5The Bank of England held interest rates at 3.75% in September by a 6–3 majority.

Britain's unemployment rate stood at 4.7% in June to August 2026, according to the October bulletin from the Office for National Statistics, as job vacancies fell and total pay growth slowed. The employment rate stood at 75.3% over the same period, among labour market indicators preceding the Bank of England's next interest rate decision. A preliminary estimate for September showed the number of payrolled employees rose by 13,000 from August, the ONS said. But the number remained 66,000 below its level a year earlier, despite the monthly increase. The divergence between the monthly improvement and annual decline in payroll employment came in a labour market the ONS described as broadly stable.

On wages, the Office for National Statistics said average regular pay in Britain grew by 3.7% year on year in June to August 2026. This rate covers pay excluding bonuses, as defined in the October average weekly earnings bulletin. Annual growth in average total pay, which includes bonuses, slowed over the same period. Total pay growth had stood at 3.9% in the previous three-month period before declining in the latest reading. Growth in pay including bonuses therefore stood at the same rate as regular pay, according to the figures released by the ONS for the period ending in August.

On labour demand, the number of UK job vacancies fell to 691,000 in July to September 2026, according to the Office for National Statistics' jobs and vacancies bulletin. That represented a quarterly decline of 21,000 vacancies, or 2.9%, compared with the previous three-month period. Vacancies fell by 37,000, or 5.1%, from a year earlier, declining on both quarterly and annual comparisons. In companies' responses to the vacancies survey, rising labour costs emerged as a factor that could deter small businesses from hiring, the ONS said. Those responses specifically cited "higher labour costs", as the number of positions businesses sought to fill contracted.

The labour market developments follow the Bank of England's September decision to hold interest rates at 3.75%, at a meeting where the Monetary Policy Committee was divided over the appropriate rate level. The decision to hold passed by a 6–3 majority, according to the monetary policy summary and meeting minutes published by the bank. Members who opposed holding rates backed an increase of 0.25 percentage points instead of keeping them at their existing level. Their proposal sought to raise the interest rate to 4%, according to the minutes. In its assessment accompanying the September decision, the committee said "risks around the inflation outlook are skewed to the upside", an assessment that accompanied its vote to hold rates despite a minority of members supporting an increase.

In the backdrop to the September decision, annual UK consumer price inflation had risen to 3.1% in August 2026, according to the Office for National Statistics. That followed an annual consumer price increase of 2.9% in July, the immediately preceding month. The ONS said transport made the largest upward contribution to the change in the annual inflation rate between July and August. It singled out motor fuels among the transport components contributing to the increase, according to the August consumer prices bulletin. The rise in inflation thus preceded the Bank of England meeting that left rates unchanged, while those opposing a hold backed tighter monetary policy.

The Office for National Statistics is scheduled to publish its next consumer price inflation release on 21 October 2026, according to its official release calendar. The release covers price movements during September 2026, the month in which the Bank of England held its previous monetary policy meeting. The ONS set the release of the inflation figures for 7 a.m. UK time, ahead of the next monetary policy decision. The Bank of England announces its next decision on 5 November 2026, alongside the meeting summary and minutes and the November Monetary Policy Report. The next release of British labour market data then falls on 17 November 2026, according to the date announced by the ONS in its October bulletin.