The number of payrolled employees in the UK fell by 101,000, or 0.3%, in the year to July 2026, according to the Office for National Statistics (ONS).
An early estimate for August put the total at 30.2 million, 145,000 lower than a year earlier, though the ONS said that figure is provisional and likely to be revised.
The unemployment rate was 4.9% in the three months to July, up 0.2 percentage points on the year and little changed on the quarter.
Vacancies fell by 8,000, or 1.1%, to 702,000 in the three months to August. Outside the pandemic period, the last time the ONS recorded 702,000 or fewer vacancies was in August to October 2014.
Regular pay, excluding bonuses, grew by 3.5% in the year to July, and total pay including bonuses by 3.9%, down from 4.2% in the previous three-month period. Regular pay grew by 6.3% in the public sector and 2.9% in the private sector.
Liz McKeown, director of economic statistics at the ONS, commented: "The labour market remains broadly stable, with employment and unemployment rates largely unchanged in the latest period. However, payrolled employee numbers continue to edge down, with falls over the past year particularly evident in the retail and hospitality sectors.
"Vacancies remain at their lowest level outside the pandemic period for more than a decade, with smaller businesses continuing to report that increased labour costs are affecting hiring decisions."
Minutes of the Bank of England's Monetary Policy Committee meeting, published on 17 September, describe demand for workers as weak, but say some measures of hiring rose in August and spare capacity in the jobs market is likely to have stabilised.
The Bank puts underlying private sector pay growth at around 3.5%. It said the ONS figure of 2.9% had been held down by temporary shifts in the make-up of the workforce.
Three members voted to raise Bank Rate from 3.75% to 4%, arguing that spare capacity may already have peaked and that inflation will be at its highest in early 2027, just as pay settlements are agreed. The six who voted to hold judged that a soft labour market would limit how far higher energy prices feed into wages.
What a weaker jobs market means for your income
The jobs market reaches household finances through job security, the pace of pay rises and interest rates.
Adjusted for inflation, regular pay was 0.8% higher than a year earlier, on the ONS measure using CPI, so spending power is rising slowly. The Bank expects CPI inflation to pass 4% early in 2027, above the current pace of regular pay growth.
Your financial planner can look at how secure your income is, how much you hold in reserve and whether your savings and investment plans still fit your circumstances, including if you face redundancy or a change of employer. If your work or income position has changed, please get in touch.