UK loses 85,000 payrolled jobs in a single year
Key Points
- Payrolled employees fell 85,000 in the year to May 2026
- Numbers rose slightly on the month, up 3,000
- Unemployment held at 4.9% in March to May
- Early June estimate shows a further 71,000 annual fall
The number of payrolled employees in the UK fell by 85,000 in the year to May 2026, confirming a sustained cooling in the jobs market even as monthly numbers stabilised.
Data from the Office for National Statistics shows the 0.3% annual fall based on HM Revenue and Customs administrative data, though numbers barely moved on the month, edging up 3,000 between April and May.
The early estimate for June points the same way, showing a 71,000 annual decrease to 30.3 million payrolled employees, largely unchanged on the month with a fall of just 4,000. The ONS cautions that June figures remain provisional and subject to revision.
Unemployment steady with vacancies falling
The unemployment rate held at 4.9% in March to May, up 0.2 percentage points on the year but down 0.1 points on the quarter. The employment rate for people aged 16 to 64 stood at 75.1%, and economic inactivity fell slightly to 20.9%.
However, there are significantly fewer vacancies, leading to fewer job opportunities. Early estimates for April to June suggest a fall of 7,000 to 712,000 open positions, extending a long run of quarterly declines. The Claimant Count rose on the month to an estimated 1.689 million, though it fell on the year.
There are also some conflicting signals coming from the data.
The ONS flagged a divergence between its two main employee measures this quarter. The Labour Force Survey showed an increase of 115,000 employees in March to May, while the comparable payroll data showed a 30,000 decrease.
The statistics body said its view remains that the payroll data currently provides the most reliable measure of employees, and it will assess whether the divergence persists when more data arrives next month.
What it means for the new government
The figures come on Prime Minister Andy Burnham’s first full day in office, and they frame one of his stated priorities. Burnham placed clear emphasis on helping more young people into work in his Downing Street speech on Monday (20 July).
Commenting on the data, Quilter Cheviot Investment Manager Jonathan Raymond noted that businesses have become increasingly cautious about hiring as they contend with higher operating costs and an uncertain economic backdrop.
He added that creating opportunities for younger workers while supporting business confidence will be one of the key tests of the new government.
Raymond also noted that although hiring conditions are softening, wage pressures have yet to fade, with regular earnings growth holding at 3.4%.
The Bank of England will weigh today’s figures at its interest rate decision in just over a week.
A weaker jobs market typically strengthens the case for rate cuts, which would feed through to cheaper mortgages, but inflation data due tomorrow could complicate the picture if price pressures edge higher as some analysts expect.
For workers, the numbers show a market that has stopped shrinking rapidly but is not yet recovering, with fewer openings and employers in less of a hurry to fill them.
