UK Jobs Growth Stalls as Claimant Count Jumps, Wage Pressures Ease Slightly

The UK’s labor market sent mixed signals in May, with employment growth stalling and unemployment edging lower even as the number of people claiming unemployment-related benefits rose sharply. Payrolled employment increased by just 2k during the month, while the annual number of payrolled employees fell by -119k, or -0.4% yoy, leaving total payroll employment at 30.3m. Meanwhile, the claimant count rose by 31.2k, accelerating from April’s 8.3k increase and pointing to some deterioration in labor market conditions.

Despite those signs of softening, broader labor market measures remained relatively resilient. The unemployment rate dipped from 5.0% to 4.9% in the three months to April, while wage growth remained elevated. Average earnings excluding bonuses rose 4.4% yoy, unchanged from the previous three-month period. Total earnings growth including bonuses held steady at 3.4% yoy. Median monthly pay growth slowed modestly from 4.8% yoy to 4.6% yoy in May but remained well above inflation.

For the Bank of England, the report is unlikely to materially alter the policy outlook. The rise in claimant count and weak payroll growth suggest that higher interest rates are continuing to weigh on labor demand. However, wage growth remains strong enough to keep concerns about domestic inflation pressures alive, particularly alongside elevated services inflation. The data reinforce the view that the labor market is gradually cooling rather than weakening abruptly, supporting expectations that the BoE will keep rates unchanged while retaining a tightening bias for later in the year.

UK Labor Market (May 2026)

Three Months to April 2026

Full UK labour market overview release here.