The latest Office for National Statistics labour market figures point to a jobs market that remains resilient but cautious, with unemployment at 4.7% and vacancies falling to 691,000.
Key takeaways
- Employer confidence remains constrained by uncertainty ahead of the Autumn Budget.
- The sharp fall in vacancies is raising concerns for jobseekers and early-career opportunities.
- Industry leaders want lower employment costs and clearer policy direction to unlock hiring.
“Today’s figures take some of the shine off recent labour market momentum… the biggest fall in vacancies since the start of the year is a bitter blow for jobseekers.”
Maxine Bligh, Interim Chief Executive, REC
The latest ONS labour market figures have sparked a broad call from employers and recruitment leaders for greater certainty ahead of the Autumn Budget.
The figures show unemployment at 4.7% for people aged 16 and over, while vacancies have fallen to 691,000 for the July-to-September period. Industry commentators broadly agree that the market is not collapsing, but say businesses are holding back on major hiring and investment decisions.
Vacancies add pressure for jobseekers
Maxine Bligh, Interim Chief Executive of the Recruitment and Employment Confederation (REC), said the figures showed employment was up, unemployment was down and wage growth had picked up, but warned that the fall in vacancies was a setback for jobseekers.
“Jobseekers and the Chancellor will hope the Budget comes at the right moment to boost business confidence, particularly among smaller firms facing higher employment costs,” she said. The REC called for action to reduce barriers to recruitment, including lower employment costs and a pragmatic approach to employment rights reforms.
Small businesses holding fire
Kevin Fitzgerald, UK Managing Director at Employment Hero, said small-business hiring momentum had slowed, with its Employment Index showing employment growth falling from 4.9% in March to 2.9% in September.
“With the Autumn Budget approaching, SMEs are understandably holding fire,” he said. “Small businesses have shown remarkable resilience, but with hiring only now returning to early-2024 levels, the Chancellor needs to recognise that there is a limit to how much uncertainty they can absorb.”
Hiring is selective, not disappearing
Lee Chant, Managing Director, UK & Ireland at ManpowerGroup UK, said demand had not disappeared but was being redirected towards roles with a clear operational need and skills that support productivity and growth.
Jack Kennedy, Senior Economist at Indeed, said the continued slide in vacancies pointed to ongoing hiring caution, with employers looking for clarity on their future cost base before committing to workforce expansion.
Across the responses, the message is consistent: employers remain willing to hire where the case is clear, but greater policy and economic certainty is needed to restore broader momentum.
Coursera: skills and AI readiness
Anthony Salcito, Senior VP for Enterprise, Coursera, said:
“Whilst today’s headline figures suggest some positive uptick in overall employment rates, the underlying picture is more troubling. The outlook for graduates and young job-seekers, who face an increasingly challenging and sparse jobs market, is particularly stark.
As more than a billion young people enter the workforce over the next decade, traditional education models alone cannot meet the scale of the skills challenge the world is facing. People need access to relevant skills, trusted guidance and clearer pathways into work, supported by tools that help them progress at every stage of their careers. The government can support young people through investment in targeted learning programmes that complement a degree with practical, job-relevant skills in high-demand, high-growth areas like AI, data analysis and cybersecurity.”
“AI is fundamentally changing where value sits in the workforce. And as investment in AI accelerates, investment in AI upskilling must keep pace. Yet Coursera’s latest Global Skills Report suggests the UK’s AI infrastructure deployment is already advancing faster than its talent readiness. Despite being a world leader for policy, infrastructure, and technology readiness, the UK’s workforce lags behind its competitors on skills preparedness, indicating a disconnect between its ambition to lead in AI and the ability of the workforce to support those ambitions. Addressing this gap requires concerted efforts from the UK’s institutions to ensure that skills development matches technology deployment.”
“Building a future-ready workforce will require sustained investment in skills at every stage of people’s careers. Universities, employers and government must connect education more closely to the changing world of work, equipping people with practical, job-relevant skills while helping them adapt as technology and the economy evolve. The UK’s ability to address today’s labour-market pressures and turn its AI ambitions into real-world impact depends on making that connection stronger.”
— Anthony Salcito, Senior VP for Enterprise, Coursera
DWF: hiring caution and workforce planning
Joanne Frew, Global Head of Employment & Pensions at DWF, said:
“The latest figures point to a labour market that remains resilient, with employment increasing and unemployment edging down despite the continuing economic uncertainty facing employers. The UK employment rate increased by 0.2% on the year and on the quarter, to 75.3% in June to August 2026, compared with the previous quarter. The UK unemployment rate decreased by 0.1% on the year and on the quarter, to 4.7%. The latest figures provide some cautious encouragement, suggesting that the labour market is proving capable of withstanding broader economic headwinds.
However, beneath the headline figures, there are signs that employer confidence and hiring appetite are not moving in lockstep. The estimated number of vacancies in the UK decreased in the latest quarter. Early estimates for July to September 2026 suggest a decrease of 21,000 to 691,000, compared with April to June 2026. The continued easing in vacancies may reflect a degree of caution among employers as they navigate one of the most significant periods of employment law reform in recent years.
Annual growth in employees’ average regular earnings was 3.7% in June to August 2026 and has been relatively stable over the past six consecutive three-month periods, after a year of slowing growth. After a year of moderation, earnings growth now appears to be finding a new equilibrium, providing a clearer backdrop for pay and reward decisions. For employers, predictability on wages is likely to be welcomed after several years in which workforce costs have been anything but predictable.
While the outlook for UK growth has improved, employers are unlikely to feel that the pressure is off. Rising energy costs are expected to continue weighing on business costs, while the Employment Rights Act 2025 is already reshaping workforce planning decisions. With enhanced unfair dismissal protection due to take effect from 1 January 2027, reducing the qualifying period from two years to six months and removing the compensation cap, employers are placing greater emphasis on getting recruitment decisions right first time. The result is a growing focus on hiring fewer people, but hiring the right people. As the cost and risk of a poor recruitment decision increases, robust recruitment processes, effective onboarding and well-managed probationary periods are becoming business-critical rather than simply HR best practice.”
— Joanne Frew, Global Head of Employment & Pensions at DWF
Youth Futures Foundation: the urgency of youth employment action
Chris Goulden, Deputy CEO at Youth Futures Foundation, said:
“The latest labour market data from the Office for National Statistics shows that around 1 in 8 economically active young people not in full-time education (13.3%, around 446,000) are unemployed. A further 1 in 5 young people not in full-time education (19.9%, around 834,000) are economically inactive. Compared with a year ago, there are 28,000 more young people unemployed and 15,000 fewer who are economically inactive.
As the interim Young People and Work report made clear, the scale and persistence of the challenge facing young people who are not in education, employment or training (NEET) will require ambitious, system-level reform. To achieve meaningful and lasting change, we must continue to strengthen the evidence base to ensure the right programmes and interventions are in place.
This is why we launched our expanded Youth Employment Toolkit last month, which synthesises high-quality international evidence on 17 of the most common youth employment interventions – including apprenticeships, basic skills training and wage subsidies. By making this evidence more accessible to policymakers and practitioners, we can help inform decisions about where investment and support can make the greatest difference.
This week, the Prime Minister highlighted both the economic and moral cost of failing to address this issue. As we await next week’s Budget and the final recommendations of the Young People and Work report, we have a significant opportunity to turn evidence into action and improve outcomes for young people. If the UK matched the Netherlands’ youth participation rate, over half a million more young people could be in work or education, delivering a significant long-term boost to the economy.”
Visit the Youth Futures Foundation Data Dashboard for the latest youth employment data.
— Chris Goulden, Deputy CEO, Youth Futures Foundation
