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

UK unemployment at 4.7% as markets price in November rate rise

Key Facts

1Britain's unemployment rate stood at 4.7% in June–August 2026.
2Annual earnings growth including bonuses slowed to 3.7% from 3.9% in the previous three-month period.
3Vacancies fell by 21,000, or 2.9%, to 691,000 in July–September 2026.
4The Bank of England held rates at 3.75% in September by a 6–3 majority.
5Money market futures were almost fully pricing in a quarter-percentage-point rate rise in November.

Britain's unemployment rate stood at 4.7% in June–August 2026, according to Office for National Statistics data released on Tuesday, 20 October, as the Bank of England's next interest rate decision approached. The employment rate rose to 75.3% over the same period, according to Labour Force Survey estimates published in the ONS labour market bulletin. Meanwhile, the economic inactivity rate fell to 20.9%, alongside the increase in the share of people in employment over the survey period. The moves came as money market futures were almost fully pricing in a quarter-percentage-point rate rise at the November meeting, according to Reuters. But the rise in the employment rate also coincided with slower growth in average weekly earnings including bonuses and a decline in job vacancies, according to ONS releases on wages and labour demand.

In the latest monthly estimates, the preliminary figure for September showed an increase of 13,000 payrolled employees, according to the ONS. That brought total payrolled employment to 30.3 million, in the estimate published as part of the October labour market data. In the same month, the number of people claiming unemployment benefits rose to 1.701 million, increasing both month on month and compared with a year earlier. Job vacancies, meanwhile, fell by 21,000 in July–September 2026 compared with the previous quarter, according to the ONS jobs and vacancies bulletin. The quarterly decline was 2.9%, bringing total vacancies to 691,000, alongside the preliminary monthly increase in payrolled employment.

The decline in vacancies during July–September extended to 14 of 18 sectors, according to the ONS, with small businesses holding back on hiring because of labour costs. Vacancy Survey responses cited by the ONS indicated that these businesses "may not recruit because of increases in labour costs". On wages, annual growth in average weekly earnings including bonuses slowed to 3.7% in June–August, from 3.9% in May–July. Regular pay growth differed between sectors, reaching 6.3% annually in the public sector compared with 3.0% in the private sector during June–August, according to the earnings bulletin. After adjusting for consumer price inflation including owner occupiers' housing costs, annual real regular pay growth was 0.6% over the same period, according to the ONS.

The labour market data follow the Bank of England's September decision to hold its official interest rate at 3.75%, according to the minutes of the Monetary Policy Committee meeting. The decision to hold rates was approved by a 6–3 majority, with committee members divided between maintaining the existing level and raising borrowing costs. A total of 3 members voted for a 0.25-percentage-point rate rise, rather than backing the decision supported by the majority at that meeting. Their proposal would have taken the official interest rate to 4%, according to the bank's published details of the September vote. Explaining its stance on inflation, the bank warned of the risks from persistently high energy prices, saying: "The longer energy prices remain elevated, the greater the risk of persistent inflation."

In currency markets, Reuters reported on Tuesday that sterling had reached its strongest level against the euro since May 2025 on Monday. That peak preceded Tuesday's British labour market data, having been reached during the session on Monday, 19 October, according to the chronology reported by the agency. Sterling's trading at those levels coincided with money markets pricing in a rate increase at the next meeting, according to Reuters' coverage of futures. The agency described a quarter-percentage-point rate rise in November as almost fully priced in, with the official rate remaining at the level set by the September decision. That pricing was closer to the tightening path backed by the dissenters at the September meeting, when they proposed an increase of the same size instead of holding rates steady.

The next economic release is due on 21 October 2026, when the ONS publishes Britain's September consumer price inflation report, according to the official release calendar. The ONS scheduled the release for 7:00 a.m. local time, following the publication of labour market and wage data the previous day. After the inflation release, the Bank of England announces its next monetary policy decision on 5 November 2026, according to the Monetary Policy Committee's meeting schedule. The announcement coincides with publication of the Monetary Policy Report, on the date the bank designated for both the rate decision and the report's release. The ONS then publishes the next labour market data on 17 November 2026, after the scheduled November interest rate decision and Monetary Policy Report.