The ONS put UK job vacancies at 702,000 in June to August. Outside the pandemic, the last time the count was that low was 2014. For employers the practical effect is a hiring market that is in your favour – but the reason it has tilted that way should give any SME pause for thought.
The headline numbers
The September release from the Office of National Statistics covers May to July 2026 for the survey data, with payroll figures running to July and a flash estimate for August.
- Vacancies: 702,000 (June to August), down 8,000 (1.1%) on the quarter and 16,000 since January to March
- Payrolled employees: 30.2 million in July, down 101,000 (0.3%) on the year and 19,000 on the month. The August flash estimate puts the annual fall at 145,000 (0.5%)
- Unemployment: 4.9%, up 0.2 percentage points on the year
- Employment rate: 75.1%, down 0.1 percentage points; economic inactivity 20.9%
- Regular pay growth: 3.5% – but 2.9% in the private sector against 6.3% in the public sector
- Real regular pay growth: 0.6% once CPIH is stripped out
- Claimant count: 1.692 million in August, up on both the month and the year
Why the vacancy number is the one to watch
Unemployment at 4.9% is a slow-moving, lagging figure. Vacancies tell you what is happening in the labour market when it comes to the willingness of employees to take people on.
At 702,000, the ONS notes that outside the COVID period you have to go back to August to October 2014 to find a lower count. That is materially less competition for candidates than at any point in the past decade. If you have a role open, your applicant pool is deeper, your time-to-hire is shorter and your offer is less likely to be gazumped than it was a year ago.
The flip side is that this is not supply catching up with demand. Demand has gone.
The ONS has told you why smaller firms have stopped
Feedback from the ONS Vacancy Survey “continues to suggest that smaller firms may not be recruiting because of increases in labour costs.” That is a clear indication of ONS confirming what most owner-managers have already worked out on their own spreadsheet.
Employer National Insurance changes and successive wage floor uplifts have raised the cost of an additional head, and the cheapest response is not to add one. The 101,000 fall in payrolled employees over the year is a clear sign of that.
If you have been quietly absorbing work rather than replacing a leaver, you are alone in this.
Pay has split into two economies
The gap between 2.9% private sector and 6.3% public sector regular pay growth is the widest signal in the release, and it is the one to use when you set next year’s awards.
Most benchmarking conversations start with the headline 3.5%. For a private-sector SME, that number is inflated by public-sector settlements you are not competing with. 2.9% is your benchmark.
It is also worth knowing that real regular pay is growing at only 0.6%. A 3% award is a real-terms rise for your staff this year. Two years ago it would not have been. That gives you room to hold awards at a sustainable level without the conversation feeling like a cut – provided you say so plainly rather than leaving people to assume the worst.
Four things to do with this information
Reprice your recruitment assumptions. Budgets built on conditions 3 to 4 years ago – premium salaries, agency fees, long searches – are overstated. Rerun an open role at today’s market rate before you sign off the spend.
Move on any hire you have been deferring. A loosening market is a window, not a permanent state. Candidates who were immovable eighteen months ago are answering emails.
Recalibrate retention risk downwards, but not to zero. With vacancies at a twelve-year low, the good people have fewer places to go. That is a reason to invest in development rather than counter-offers, not a reason to take them for granted.
Treat the payroll fall as a cost warning, not just a jobs story. Employment is falling because employing people has become more expensive. Model your 2027 staffing costs against announced wage floor and NIC positions now, and decide what you can carry before the autumn Budget adds anything further.
The honest summary
This is a cooling market rather than a collapsing one. Employment is still historically high, real pay is still rising, and a 4.9% unemployment rate is not a crisis by any post-2008 standard.
But the direction is unambiguous: fewer vacancies, fewer payrolled employees, a rising claimant count and wage growth that has slowed to roughly the rate of inflation. For employers, that means hiring is getting easier at precisely the moment fewer of you want to do it. Whether that is an opportunity or a symptom depends entirely on what your own cost base looks like going into the autumn.
