Full Breakdown
UK Job Vacancies Slip to Five-Year Low Amid Rising Costs
8/18/2026, 11:14:24 AM
Core Event: Vacancy Decline and Small-Business Hiring Pull-back
Official figures from the Office for National Statistics (ONS) show that the number of job vacancies fell to 707,000 over the May-to-July period, the lowest level in more than five years. The unemployment rate held steady at 4.9%, while the count of payrolled employees dropped by 13,000 in June with early estimates indicating a similar fall in July. The contraction is concentrated among smaller firms, which cite higher labour and operating expenses as the primary reason for scaling back recruitment.
Background & Context: Cost Pressures on Employers
Energy costs have risen sharply since the onset of the Iran war, adding to the financial strain on businesses. In addition, increases in National Insurance contributions and the minimum wage have made staffing more expensive. Employers also point to intensified global headwinds and growing policy uncertainty, while greater automation is reducing demand for entry-level positions.
Data & Statistics
- Vacancies: 707,000 (May-July) – lowest in >5 years.
- Unemployment: 4.9% (steady).
- Payrolled employees: –13,000 (June) with a projected –13,000 (July).
- Regular earnings growth (excluding bonuses): 3.5% annualised (three months to June).
- Public-sector pay growth: 6.1% (driven by NHS awards).
- Private-sector pay growth: 2.8%.
Official Statements & Responses
Suren Thiru, chief economist at the Institute of Chartered Accountants in England and Wales, described the labour market as “stuck in a low-churn limbo,” noting employers’ reluctance to hire, fire, or raise wages amid rising costs and policy uncertainty. The ONS characterised the vacancy decline as a “red flag” for the jobs market, indicating shrinking labour demand alongside soaring employment and energy costs, and highlighted the role of automation in squeezing entry-level roles.
Verbatim Quotes
- “The UK labour market remains stuck in a low-churn limbo, with employers reluctant to hire, fire or offer bigger pay rises as they grapple with rising costs, intensifying global headwinds and heightened policy uncertainty,” — Suren Thiru, chief economist at the Institute of Chartered Accountants in England and Wales
- “The persistent slide in vacancies is a red flag for the jobs market, suggesting labour demand is shrinking amid soaring employment and energy costs, while greater automation is also squeezing some entry-level roles.” — The ONS
