UK Labour Market (May/Jun) Stabilising (though not for young people)

Research evidence excerpt

UK Labour Market (May/Jun) Stabilising (though not for young people)

21 July 2026

UK Labour Market (May/Jun) Economics

Stabilising (though not for young people) United Kingdom

◆ The UK jobs market is showing signs of stabilisation, with PAYE jobs numbers Elizabeth Martins

flat and vacancies falling at a slower rate SeniorHSBC BankEconomist,plc UK

liz.martins@hsbc.com

◆ Meanwhile, total pay growth was lower than expected and private sector +44 20 7991 2170

regular pay growth slowed to 2.9% from an upwardly revised 3.0%

◆ That said, the picture remains a two-speed one: for younger people, the

unemployment rate is much higher, and still rising

Facts

The UK jobs market is showing signs of stabilisation, both in the surveys and in the hard data. PAYE jobs

are flatlining (-4k in June after a 3k increase in May, keeping overall headcount roughly flat over the two

months).

Vacancies were down by “only” 7k in the three months to June. In percentage terms, this was the smallest

3m/3m fall in four months (-0.7%) and the smallest y-o-y fall (-2.5%) since 2022.

The Labour Force Survey (LFS) measures look stronger: the unemployment rate dropped to 4.9% in April

and stayed at that level in May, in line with expectations (chart 1). And employment rose by 148k in the

three months to May.

These data are still subject to some methodological question marks. The ONS said in an update today that

the survey is now back to pre-COVID response rates for the most part, but acknowledged that coherence

between the different measures remained a challenge (chart 2).

Pay growth still slowing slowly

Meanwhile, total pay fell unexpectedly from 4.4% to 4.3% 3m/yr (consensus: 4.5%)

Regular pay growth was unchanged as expected, while the BoE’s preferred measure of private sector