UK Unemployment Rate Falls to 4.9%
The UK unemployment rate declined to 4.9% in the three months to May 2026, according to data released by the Office for National Statistics.
The figure was slightly better than the 5.0% rate expected by economists. It was also 0.1 percentage points lower than in the previous three-month period.
The latest figures suggest that the UK labour market remained more resilient than analysts had predicted.
Employment Growth Beats Expectations
The number of people in employment increased by 147,000 during the three months to May.
That was well above the forecast increase of 80,000.
The employment rate among people aged between 16 and 64 rose to 75.1%. This represented an increase of 0.1 percentage points compared with the previous quarter.
However, the rate remained 0.1 percentage points below the level recorded during the same period one year earlier.
UK Wage Growth Slows
Average weekly earnings increased by 4.3% compared with the same period a year ago.
The result came in slightly below the 4.5% growth rate expected by economists.
Regular earnings, which exclude bonuses, rose by 3.4% annually. That figure matched market expectations.
Slower wage growth could reduce inflationary pressure, although workers are still seeing only modest increases in purchasing power after accounting for rising prices.
Public Sector Pay Outpaces Private Wages
Wage growth varied significantly between the private and public sectors.
Regular earnings in the private sector rose by 2.9% from a year earlier. Meanwhile, public sector earnings increased by 5.5%.
The ONS said public sector wage figures continued to be influenced by changes in the timing of annual pay awards during 2026.
Claimant Count Rises in June
The number of people claiming unemployment-related benefits increased by 6,700 in June compared with the previous month.
Early estimates based on HM Revenue and Customs data also showed that the number of people on company payrolls fell by 4,000 between May and June.
Total payrolled employment stood at approximately 30.3 million.
These figures indicate that some parts of the labour market remain under pressure despite the decline in the headline unemployment rate.
Economic Inactivity Declines
The economic inactivity rate for people aged between 16 and 64 fell to 20.9% in the three months from March to May.
The rate declined by 0.1 percentage points compared with both the previous quarter and the same period one year earlier.
Economic inactivity includes people who are not working and are not actively searching for employment.
UK Job Vacancies Continue to Fall
The number of job vacancies declined by 7,000 during the April-to-June quarter.
Total vacancies fell to 712,000 compared with the previous three-month period from January to March.
The continued decline suggests that demand for new workers is cooling as employers remain cautious about hiring.
Real Earnings Record Limited Growth
After adjusting for inflation using the Consumer Prices Index including owner-occupiers’ housing costs, regular real wages rose by just 0.3%.
Total real earnings, including bonuses, increased by 1.1% in the three months to May.
Although wages continued to rise faster than inflation, the data showed that growth in workers’ real spending power remained relatively limited.
