UK unemployment fell to 4.7% in the June to August quarter, below the 4.9% consensus, and sterling edged higher. The Office for National Statistics (ONS) published the figures at 7am BST today. GBP/USD traded at 1.3342 at 12:52 BST, up 0.25 per cent, or about 33 pips, on the previous close of 1.3309. EUR/GBP was at 0.8402 at 12:53 BST, down 0.29 per cent on the previous close of 0.8427. The data and a weaker dollar earlier in the session both appear to have helped sterling, so the whole gain cannot be put down to the labour market. GBP/USD opened the day at 1.3307 and its session high so far is 1.3359.
The ILO unemployment rate for those aged 16 and over was 4.7%, down 0.1 percentage points on the year and on the quarter, against a prior print of 4.9%. Employment rose by 102,000 in the three months, against a prior rise of 67,000. The ONS put the 16 to 64 employment rate at 75.3%, up 0.2 points on the year and the quarter. Inactivity stood at 20.9%.
Pay was less clear cut. Regular earnings growth was 3.7% year on year in the three months to August, against a consensus of 3.6% and a prior of 3.5% that was revised up to 3.6%. The ONS said regular pay growth has been relatively stable over six consecutive three-month periods.
Total earnings growth slowed to 3.7% from 3.9%, below the 3.8% consensus. The ONS said total pay growth is at its lowest in nearly six years, last lower in August to October 2020, when it was 2.8%.
Demand for labour looked weaker. Vacancies for July to September were 691,000, down 21,000, or 2.9%, on the quarter, the lowest outside the pandemic since July to September 2014, when they were 686,000. The provisional flash estimate showed payrolled employees up 13,000 on the month in September to 30.3 million, but down 66,000, or 0.2%, on the year. The prior monthly figure was revised from a fall of 26,000 to a rise of 1,000. The claimant count rose by 30,300 in September, against a consensus of 19,400 and a prior of 27,800.
The ONS said the labour market “remains broadly flat in 2026” and flagged quality issues with its Labour Force Survey estimates. The headline employment and unemployment figures therefore carry that caveat.
The print arrived with a Bank of England (BoE) rate rise in November already heavily priced, at roughly 95%. Justin Low of investingLive said the data “will very much reinforce those expectations more than anything else”.
UK consumer price inflation (CPI) is due tomorrow. BoE speaker Greene is scheduled for 6pm UK time today, and the next ONS labour market release is due on 17 November 2026.
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