UK Job Vacancies Hit Five-Year Low as Private Wages Cool

The Office for National Statistics reported that UK job vacancies fell to 707,000 between May and July 2026, the lowest level in over five years excluding the pandemic. The unemployment rate remained steady at 4.9% for the three months ending in June, though monthly figures reached 5.4%. Payroll employment showed a downward trend, with payrolled employees falling to 30.3 million in July.

A sharp divergence emerged in wage growth for the period ending in June. Public sector regular pay rose by 6.1%, driven by NHS pay awards, while private sector growth slowed to 2.8%, a near six-year low. Overall regular wage growth held at 3.5%, while total earnings including bonuses rose by 4.1%.

Economists attribute the hiring slump to rising labor and operating costs, particularly for small businesses, alongside energy price spikes linked to the war in Iran. Suren Thiru of the Institute of Chartered Accountants in England and Wales described the market as being in a low-churn limbo.

Political reactions were split, with Secretary of State for Work and Pensions Pat McFadden defending government reforms to Universal Credit, while Shadow Chancellor Mel Stride claimed the government prioritizes welfare over work. The cooling private sector wages have led some analysts to predict the Bank of England will maintain interest rates at 3.75% to avoid stifling the economy, though other reports suggest the bank may consider hikes in September to combat inflation expected to reach 3%.