Labour Market Overview, UK: September 2026
The latest labour market figures show that hiring conditions remain subdued, with payroll employment falling and vacancies edging down again. Although employment and unemployment rates remain broadly stable and real wages continue to grow, employers appear to be maintaining a cautious approach to recruitment.
Employment Trends: Payroll Employment Continues to Edge Lower
Estimates from HM Revenue & Customs (HMRC) show that the number of payrolled employees in the UK fell by 101,000 (0.3%) between July 2025 and July 2026 and decreased by 19,000 (0.1%) between June and July.
Looking at the May to July 2026 period, payrolled employment fell by 84,000 (0.3%) compared with a year earlier and by 39,000 (0.1%) over the quarter.
Early estimates for August point to a slightly weaker picture, with payroll employment down 145,000 (0.5%) year-on-year and falling by 26,000 (0.1%) on the month to 30.2 million employees. These figures remain provisional and may be revised as more payroll data become available.
The employment rate for people aged 16 to 64 remained at 75.1%, broadly unchanged on the quarter. Unemployment stood at 4.9%, while economic inactivity edged down to 20.9%.
Vacancies and Hiring: Recruitment Demand Remains Weak
The number of job vacancies continued to fall during the latest quarter, although vacancy levels have remained relatively stable since the beginning of the year.
Early estimates for June to August 2026 show vacancies decreasing by 8,000 (1.1%) to 702,000. Since January to March, vacancies have fallen by only 16,000.
Despite this relative stability, the total remains historically low. Outside the pandemic period, the last time the UK recorded 702,000 or fewer vacancies was in 2014.
Feedback from the ONS Vacancy Survey also suggests that higher labour costs continue to discourage some smaller businesses from recruiting.
Pay and Earnings: Wage Growth Remains Ahead of Inflation
Annual growth in regular earnings remained at 3.5% in May to July 2026 and has been relatively stable over the past five three-month periods following a prolonged slowdown.
Growth in total earnings eased to 3.9%, down from 4.2% in the previous three-month period.
Public sector regular earnings increased by 6.3%, compared with 2.9% in the private sector, although the timing of public sector pay awards continues to affect the comparison.
After adjusting for inflation using CPIH, regular pay increased by 0.6% in real terms and total pay by 0.9%, meaning workers continued to see modest growth in spending power.
Claimants and Wider Employment
The Claimant Count increased during August to an estimated 1.692 million, rising both on the month and compared with a year earlier.
The wider measure of workforce jobs stood at 36.7 million in June 2026, down 48,000 (0.1%) from March but up 60,000 (0.2%) compared with a year earlier.
Public sector employment continued to increase, reaching approximately 6.21 million, up 11,000 on the quarter and 33,000 compared with June 2025.
What This Means for Recruiters
The September figures point to a recruitment market that remains stable but subdued. Vacancy numbers have not fallen dramatically since the beginning of the year, but payroll employment continues to edge lower and employers remain selective about adding headcount.
For recruitment agencies, this means competition for available vacancies is likely to remain strong, making specialist knowledge, established candidate networks and demonstrable delivery increasingly important.
Key Opportunities for Recruitment Agencies
- Focus on specialist and hard-to-fill vacancies where employers need external recruitment expertise.
- Target organisations with genuine hiring requirements rather than relying on high-volume recruitment.
- Help clients with salary benchmarking and candidate market insight as private sector wage growth remains modest.
- Emphasise quality of hire, candidate access and speed of delivery when demonstrating the value of agency recruitment.
The figures do not point to a significant recovery in hiring, but neither do they suggest a sharp deterioration. Instead, the UK recruitment market remains selective, with opportunities available for agencies that can identify active hiring demand and provide expertise that employers cannot easily replicate internally.
Office for National Statistics (ONS), released 15 September 2026, ONS website, statistical bulletin, Labour market overview, UK: September 2026
Browse the newest Recruitment Consultant Jobs with leading recruitment agencies recruiting across the UK.
My Recruiter Jobs