UK—Pay Growth Slightly Firmer Than Expected but Payrolls Remain Weak

Economics Research 15 September 2026 | 9:17AM BST

UK—Pay Growth Slightly Firmer Than Expected but Payrolls Remain Weak

BOTTOM LINE: This morning’s labour market numbers showed the unemployment James Moberly | rate remaining at 4.9% in July, in line with consensus expectations but a tenth below Goldman Sachs International our forecast. But the payrolls figures were weaker than expected, with the July figures revised downwards and the August flash print showing a 26k contraction. Private sector regular pay growth came in a tenth above consensus at 2.9% in July on the back of an upwards revision to the June figures. Nonetheless, private sector pay growth adjusted for compositional effects remains close to the BoE’s estimate of the target-consistent pace of wage growth.

Unemployment Rate (Jul): 4.9%; GS: 5.0%; Consensus: 4.9%; Previous (Jun): 4.9% (unrevised); all %3m m.a.

Payrolled Employment Monthly Change (Aug): -26k; GS: -5k; Consensus -10k; Previous (Jul): -19k (revised down from -13k); all mom changes

Whole Economy Total Pay (Jul): 3.9%; GS: 3.9%; Consensus: 3.9%; Previous (Jun): 4.2% (revised up from 4.1%); all %3myoy

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

Private Sector Regular Pay (Jul): 2.9%; GS: 2.8%; Consensus: 2.8%; Previous (Jun): 2.9% (revised up from 2.8%); all %3myoy

The three-month Labour Force Survey (LFS) unemployment rate remained unchanged at 4.9% in July, in line with consensus expectations but a tenth below our forecast, with the single-month rate coming in 4.7%. The vacancies-to-unemployment ratio remained unchanged at 0.40 in the three months to July. Vacancies figures for August showed the three-month average dropping to 702k (from 706k), while the seasonally adjusted single-month figure was lower at 687k.

The payrolls figures for July were revised down slightly to show a 19k decrease (versus a 13k decline in the flash estimate). The August flash numbers showed a larger than expected 26k contraction. On a three-month on three-month basis, the payrolls figures show a 0.2% (non-annualised) decrease 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.

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Three-month year-on-year private sector regular pay growth came in a tenth above expectations at 2.9% in July. The surprise was primarily driven by an upwards revision to the June figures, while the month-on-month seasonally adjusted pace moderated to 0.32% in July. 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. Whole economy regular pay growth and total pay growth were both in line with expectations at 3.5% and 3.9% respectively.

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