UK employers continued cutting staff over the summer as wage growth decelerated, official data showed, with payrolled employee numbers falling 26,000 in August and dropping 145,000 compared with August 2025.
Despite the decline in employment, the unemployment rate for people aged 16 and over held steady at 4.9% in the May-to-July quarter, according to the Office for National Statistics.
Total pay growth, including bonuses, slowed to 3.9% in the three months to July, down from 4.2% in the previous period — the lowest level in nearly six years. Regular pay growth, excluding bonuses, remained flat at 3.5%. Private-sector regular pay rose 2.9%, while public-sector annual average regular earnings growth reached 6.3%, driven largely by NHS pay awards paid out earlier in the year.
Liz McKeown, ONS director of economic statistics, said the labour market remained broadly stable but noted that payrolled employee numbers continued to edge down, with falls over the past year particularly evident in retail and hospitality.
The number of vacancies also decreased, falling 8,000, or 1.1%, to 702,000 in the June-to-August quarter from the prior period. McKeown said vacancies remain at their lowest level outside the pandemic for more than a decade, with smaller businesses reporting that higher labour costs are affecting hiring decisions.
Workforce jobs overall fell to 36.7 million in June 2026, down 48,000 from March 2026. The decline was split between self-employment jobs, which fell 43,000, and employee jobs, which dropped 10,000.
The wage data reinforced expectations that the UK state pension will rise by 3.9% next April under the triple-lock rule, which ties pension increases to the highest of average earnings growth, inflation, or a 2.5% floor. Jon Greer, head of retirement policy at Quilter, said the 3.9% earnings figure puts a like-sized pension increase firmly on track, which would raise the full New State Pension above £13,000. He noted September inflation data would formally confirm the uprating mechanism, but with inflation expected to stay below earnings growth, an earnings-led increase is the most likely outcome.
Earlier in the day, the UK released its grocery inflation report, while Eurozone industrial production data for July and US retail sales were due later.
