The UK's jobs market has hit a stumbling block, with unemployment rising and wage growth slowing in the three months leading up to June 2026. According to new data from the Office for National Statistics (ONS), the number of people out of work increased to 4.3%, up from 4.1% in the previous quarter – a worrying trend that could have far-reaching consequences for household finances and mortgages.
At the same time, the annual growth rate for regular pay, which excludes bonuses, decelerated to 5.2%. This is down from 5.8% in the prior three-month period, suggesting that inflationary pressures from wage increases may be starting to ease. Total pay growth, including bonuses, also saw a reduction, falling to 5.6% from 6.3%. These figures are likely to send ripples through businesses and households alike, with workers facing uncertainty over future pay packets.
The ONS dataset revealed that the number of job vacancies has continued its downward trend, hitting approximately 850,000 – the lowest level in two years. This decline reflects a more cautious approach from employers regarding hiring, which could exacerbate unemployment rates in the coming months as fewer opportunities become available. Long-term sickness also continues to take its toll on the workforce, with the economic inactivity rate ticking up to 21.6%.
Responding to the data, Treasury officials acknowledged that the picture is mixed but stressed their commitment to creating sustainable jobs and controlling inflation. Opposition parties, however, seized on the figures as evidence of a weakening economy under the current administration. They called for a more robust plan to stimulate growth and support working families.
The Bank of England's Monetary Policy Committee will be closely watching these labour market statistics ahead of their next interest rate decision. A sustained cooling of the jobs market could reduce pressure on the Bank to raise interest rates further or even pave the way for future cuts, depending on the trajectory of inflation.