UK Unemployment Falls to 4.7% as Job Vacancies Hit Five-Year Low

Britain’s unemployment rate unexpectedly fell to 4.7 per cent in the three months to August 2026, offering a boost to the government ahead of its upcoming budget, although declining job vacancies highlight persistent weaknesses in the labour market.

Figures released by the Office for National Statistics on Tuesday, October 20, showed unemployment fell from 4.9 per cent in the three months to July, defying economists’ expectations of an increase to 5 per cent.

The number of employees on company payrolls also increased by 13,000 between August and September to approximately 30.3 million, suggesting employment conditions may be stabilising after a prolonged period of weakness.

However, vacancies fell by 21,000 to 691,000 in the three months to September, the lowest level since early 2021. The decline was concentrated among smaller businesses struggling with higher employment costs.

Average weekly earnings, excluding bonuses, rose by 3.7 per cent annually in the three months to August, exceeding economists’ forecasts. Nevertheless, rising inflation threatens to erode workers’ purchasing power.

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  The figures come ahead of Finance Minister John Healey’s first budget, scheduled for October 28. The government faces pressure to support economic growth, ease living costs and encourage businesses to recruit more workers, particularly young people.

The latest employment data could also influence the Bank of England’s interest-rate decisions. Stronger wage growth may reinforce concerns about inflation, potentially strengthening the case for higher borrowing costs.

Despite the fall in unemployment, the continued decline in vacancies suggests Britain’s jobs market has yet to achieve a convincing recovery.