Labour Market Overview, UK: August 2026
The latest labour market figures point to a subdued but relatively stable jobs market, with payroll employment broadly flat from month to month and vacancy numbers falling only slightly. Employers remain cautious about adding headcount, but the pace of the wider slowdown appears to have eased compared with earlier in the year.
Employment Trends: Payroll Numbers Remain Broadly Stable
Estimates from HM Revenue & Customs (HMRC) show that the number of payrolled employees in the UK fell by 78,000 (0.3%) between June 2025 and June 2026. However, payroll employment was broadly unchanged on the month, falling by just 13,000 between May and June.
Looking at the April to June 2026 period, payrolled employment declined by 86,000 (0.3%) compared with a year earlier and by 37,000 (0.1%) over the quarter.
Early estimates for July 2026 show a similar picture. Payroll employment was down 94,000 (0.3%) year-on-year but fell by only 13,000 on the month, leaving the total at approximately 30.3 million employees. These figures remain provisional and may be revised.
The employment rate for people aged 16 to 64 remained at 75.1%, slightly higher on the quarter but lower than a year ago. Unemployment stood at 4.9%, while economic inactivity remained broadly unchanged at 20.9%.
Vacancies and Hiring: Market Remains Subdued but Stable
The number of job vacancies fell again during the latest quarter, although the overall picture since the start of 2026 has been relatively stable.
Early estimates for May to July 2026 show vacancies decreasing by 6,000 (0.8%) to 707,000. Since January to March, vacancies have fallen by only 11,000, suggesting the sharp declines seen previously have eased.
However, vacancy levels remain historically low. Outside the pandemic period, the last time the UK recorded 707,000 or fewer vacancies was in late 2014.
Feedback from the ONS Vacancy Survey also suggests that some smaller businesses are holding back on recruitment because of higher labour costs and other operating expenses.
Pay and Earnings: Real Wages Continue to Grow
Annual growth in average earnings remained positive, with regular pay increasing by 3.5% and total pay rising by 4.1% in April to June 2026.
Public sector regular earnings increased by 6.1%, compared with 2.8% in the private sector, although public sector figures continue to be affected by differences in the timing of annual pay awards.
After adjusting for inflation using CPIH, regular pay increased by 0.5% in real terms, while total pay rose by 1.1%, providing a modest improvement in workers' spending power.
Labour Disputes and Claimants
The Claimant Count fell during July to an estimated 1.665 million, decreasing both on the month and compared with a year earlier.
Meanwhile, approximately 47,000 working days were lost because of labour disputes across the UK during June 2026.
What This Means for Recruiters
The latest figures suggest the recruitment market remains cautious rather than contracting sharply. Employers are still selective about adding headcount, but payroll employment and vacancies have shown greater stability in recent months.
For recruitment agencies, the challenge remains winning business in a market where employers may have fewer vacancies and are taking greater care over each hire.
Key Opportunities for Recruitment Agencies
- Focus on specialist and hard-to-fill roles where access to candidates gives agencies a clear advantage.
- Help clients make better hiring decisions through salary benchmarking and market insight.
- Target businesses with genuine skills shortages rather than relying on high-volume recruitment.
- Position recruitment services around quality of hire and speed of delivery in a more selective market.
The market remains difficult for volume recruitment, particularly where employers can attract candidates directly. However, agencies with strong sector knowledge, established candidate networks and the ability to fill specialist vacancies can continue to demonstrate their value.
Office for National Statistics (ONS), released 18 August 2026, ONS website, statistical bulletin, Labour market overview, UK: August 2026
Recruiters exploring new opportunities can browse the latest Rec2Rec Jobs in London and recruitment vacancies across the UK on My Recruiter Jobs.
Employers and candidates can also explore specialist Recruitment Consultant Jobs from leading recruitment agencies and in-house talent acquisition teams.
My Recruiter Jobs