The latest indicators showed that UK labour demand continued to weaken, although the datasets covered different reporting periods. HM Revenue and Customs’ provisional payroll estimate for August showed payrolled employment falling by 26,000 from July, after July’s decline was revised from 13,000 to 19,000. Compared with a year earlier, payrolls were down 145,000, a sharper fall than July’s 101,000 annual decline. The August claimant count also increased to 1.692 million, reinforcing evidence that employers were becoming more cautious.
The broader household survey painted a less negative but older picture. In the three months to July, the employment rate was unchanged from the three months to April at 75.1%, while the unemployment rate held at 4.9%, slightly below the 5.0% market forecast. Economic inactivity edged down from 21.0% to 20.9%. However, vacancies—which cover the three months from June to August—fell from 710,000 in the three months to May to 702,000, their lowest level outside the pandemic since 2014. Given continuing concerns about the Labour Force Survey, the more timely payroll and vacancy figures provide the clearer evidence of weakening labour demand.
Wage pressure, however, has not cooled at the same pace. In the three months to July, annual growth in regular earnings remained at 3.5% for a fifth consecutive rolling period, while total earnings growth slowed from 4.2% in the three months to June to 3.9%. Private-sector regular pay growth held at 2.9%, whereas public-sector regular pay rose 6.3%, partly reflecting the timing of pay awards. The overall picture is therefore one of a labour market weakening through employment before wages: August payroll losses and June–August vacancy declines point to softer hiring, but May–July earnings data have yet to show a comparable loss of momentum.
Data Summary
| Indicator | Latest | Previous |
|---|---|---|
| Payrolled employment m/m | -26,000 | -19,000 |
| Payrolled employment y/y | -145,000 | -101,000 |
| Unemployment rate | 4.9% | 4.9% |
| Employment rate | 75.1% | 75.1% |
| Economic inactivity rate | 20.9% | 21.0% |
| Vacancies | 702,000 | 710,000 |
| Regular earnings growth | 3.5% | 3.5% |
| Total earnings growth | 3.9% | 4.2% |
| Private-sector total earnings | 3.2% | 3.7% |
| Real regular earnings growth | 0.6% | 0.6% |
Key Takeaways
- Payrolled employment fell by 26,000 in August, following a July decline revised from 13,000 to 19,000.
- The annual payroll decline widened from 101,000 to 145,000, confirming a continued deterioration in employee numbers.
- Unemployment held at 4.9%, below the 5.0% consensus, but ONS cautioned that survey improvements may be temporarily lifting measured employment.
- Vacancies fell from 710,000 to 702,000, their lowest outside the pandemic since 2014.
- The Claimant Count rose to 1.692 million and has been increasing since January. The headline release did not provide the precise monthly change.
- Regular earnings growth held at 3.5%, while total earnings slowed from 4.2% to 3.9%.
- Private-sector total pay growth fell from 3.7% to 3.2%, while public-sector wage strength was partly distorted by the earlier timing of NHS pay awards.
- Real regular earnings growth remained positive at 0.6%, indicating that softer employment demand has not eliminated real-income growth.
- The dominant signal is weaker employment before weaker wages: employers are reducing payrolls and vacancies, but regular pay growth has stopped slowing.
