UK job vacancies fell to 712,000 in the three months to May 2026, nearly half their 2022 level. Unemployment held at 4.9% for the second month in a row. The figures come from the Office for National Statistics (ONS), reported by The Guardian on July 21, 2026. The data landed the same week Andy Burnham, the new prime minister, unveiled his cabinet.

Job vacancies are open positions that employers are trying to fill. When vacancies fall, it usually means companies are hiring less. The ONS published its latest labour market report on July 21, giving the clearest picture yet of the UK job market under the new government. Early estimates for April to June 2026 show vacancies dropped by another 7,000, continuing the decline seen in earlier data (ONS).

Pay growth has also slowed. Private sector wages grew by 2.9%, and average pay including bonuses rose by 4.3% in the three months to May. Economists had expected pay including bonuses to grow by 4.5% and unemployment to reach 5.0%. The actual numbers came in a bit lower than expected on both counts.

The unemployment picture has shifted over several years. UK unemployment was 3.6% in summer 2022, rose to a peak of 5.2% last year, and has since eased to 4.9%. The drop in vacancies is just as striking: the 712,000 figure is almost half what it was in 2022, when employers were competing hard to hire workers after the pandemic.

The ONS also reported that 75.1% of people aged 16 to 64 were employed in March to May 2026, down slightly from a year earlier. The economic inactivity rate — the share of working-age people who are neither working nor looking for work — was 20.9%, down 0.1 points on both the year and the quarter. The Claimant Count, which tracks people claiming unemployment-related benefits, stood at an estimated 1.689 million in June 2026, up on the month but down on the year (ONS).

HMRC data on payrolled employees shows a gradual decline. Payrolled employment fell by 90,000 (0.3%) over the year to May 2026 and by 30,000 (0.1%) over the quarter. The early estimate for June 2026 showed a further drop of 71,000 (0.2%) on the year, bringing the total to 30.3 million.

The broader context here is that the UK labour market is cooling down from several directions. Fewer jobs are being advertised, fewer people are on payrolls compared to a year ago, and wage growth in the private sector has slipped below 3%. The unemployment rate looks stable at 4.9%, but that single number does not tell the whole story. Think of it like a thermostat reading the same temperature while the heating is slowly being turned off — the room feels fine for now, but the warmth is fading.

For the new government, this means Burnham is taking charge of a job market that looks very different from the post-pandemic boom. With vacancies cut in half and private sector pay growth below 3%, workers have less leverage to negotiate higher wages, and employers appear less eager to hire. Average pay including bonuses is 4.3%, which is higher than the 2.9% private sector regular pay figure, suggesting that one-off bonus payments are making the overall wage numbers look a bit better than the underlying trend.

The Bank of England aims for 2% inflation, meaning it wants prices to rise by about 2% a year. With private sector wages growing at 2.9%, the gap between pay growth and the inflation target has narrowed. If inflation stays near 2%, workers' pay is still growing faster than prices, which is good news for household budgets. But the slow pace of pay rises suggests employers are preparing for weaker demand rather than competing for staff.

A small counterweight comes from the inactivity rate dropping to 20.9%, which means some people are returning to the workforce. But if employers are not hiring much, those returning workers could push wages down further. The Claimant Count at 1.689 million, up slightly on the month but down on the year, does not signal a sharp rise in benefit claims.

What the data does not yet show is whether the Burnham government's policies will change any of these trends. The figures cover the three months to May and the quarter to June, all before the new administration took over. The job market the new cabinet faces is one of gradual cooling — the steepest drop in vacancies may be over, but there is no sign of a rebound yet.