UK—Labour Market Quantities Slightly Weaker Than Expected

Economics Research 18 August 2026 | 9:33AM BST

UK—Labour Market Quantities Slightly Weaker Than Expected; Private Sector Pay Growth Decelerates Further

BOTTOM LINE: This morning’s labour market numbers were slightly weaker than James Moberly | expected on the quantities side. The unemployment rate remained unchanged at Goldman Sachs International 4.9%, a tenth above our forecast, consensus, and the BoE’s estimate. Three-month average vacancies also edged down, with a more notable drop in the single-month numbers. The July flash payrolls showed a 13k contraction, versus expectations for an unchanged print, while the June monthly change was revised down. Turning to wages, three-month year-on-year private sector regular pay growth decelerated further to 2.8% – in line with expectations – despite an uptick in the month-on-month pace. That said, whole economy total pay growth was slightly stronger than expectations as public sector pay accelerated.

Unemployment Rate (Jun): 4.9%; GS: 4.8%; Consensus: 4.8%; BoE: 4.8%; Previous (May): 4.9% (unrevised); all %3m m.a.

Payrolled Employment Monthly Change (Jul): -13k; GS: 0k; Consensus 0k; Previous (Jun): -13k (revised down from -4k); all mom changes

Whole Economy Total Pay (Jun): 4.1%; GS: 3.9%; Consensus: 4.0%; Previous (May): 4.4% (revised up from 4.3%); all %3myoy

Whole Economy Regular Pay (Jun): 3.5%; GS: 3.4%; Consensus: 3.4%; Previous (May): 3.4% (unrevised); all %3myoy

Private Sector Regular Pay (Jun): 2.8%; GS: 2.8%; Consensus: 2.8%; BoE: 2.8%; Previous (May): 2.9% (unrevised); all %3myoy

The three-month Labour Force Survey (LFS) unemployment rate remained unchanged at 4.9% in June, whereas we and consensus had expected a small decrease to 4.8%. Cohort effects in the single-month figures seemed to prove somewhat stronger than we had anticipated. The June single-month of 5.4% was close to the 5.3% seen in March – with an 80% overlap between those two samples – rather than partially converging towards the notably lower April and May numbers. The vacancies-to-unemployment ratio remained unchanged at 0.40 in the three months to June. Three-month average vacancies edged down to 707k in July (from 711k), with the single-month figures showing a more notable drop on a seasonally adjusted basis to 688k (from 712k).

The flash payrolls figures for July showed a 13k month-on-month decline in employment, below expectations for an unchanged reading. The June monthly

Investors should consider this report as only a single factor in making their investment decision. For Reg AC certification and other important disclosures, see the Disclosure Appendix, or go to

change was revised down to -13k versus a flash estimate of -4k. On a three-month on three-month basis, the payrolls figures show a 0.1% (non-annualised) contraction in employment. This is notably weaker than the LFS employment figures, which instead show a 0.2% three-month on three-month expansion. However, the LFS data is often volatile over shorter horizons.

Three-month year-on-year private sector regular pay growth dropped to 2.8% (from 2.9%) in June, in line with consensus, our forecast, and the BoE’s estimate. That said, the seasonally adjusted month-on-month pace rose to 0.4%, slightly above our expectations. Changes in industry composition continue to weigh on the figures, with a downwards effect of 0.4pp on the annual rate. Even adjusting for this, however, the figures are close to the BoE’s estimate of the target-consistent rate of pay growth. That said, other indicators of pay growth remain firmer, with today’s PAYE figures showing an acceleration in mean pay growth. Whole economy regular pay growth came in a tenth above expectations at 3.5% (up from 3.4%) as public sector pay growth accelerated. Whole economy total pay growth dropped less than expected to 4.1% (from 4.4%).

Sven Jari Stehn Filippo Taddei Alexandre Stott Goldman Sachs International Goldman Sachs International Goldman Sachs Bank Europe SE - Paris Branch

James Moberly Niklas Garnadt Katya Vashkinskaya Goldman Sachs International Goldman Sachs Bank Europe SE Goldman Sachs International

Giovanni Pierdomenico Goldman Sachs International