PwC comments on ONS labour market data - October 2026

Commenting on the latest ONS labour market data, Adam Deasy, Economist at PwC UK, says:

“The UK’s labour market data is sending some mixed signals; while the unemployment rate fell 0.2 percentage points to 4.7%, the employer side of the data remains much softer. Payrolled employment stalled from July to August, while vacancies fell by 21,000. Reading through it, the labour market looks broadly stable, but there is still little evidence of a convincing recovery in demand for workers after a long period of softening.

“That softening remains apparent in the private sector in particular. Pay growth remains sharply divided: regular wages are rising by 3.0% in the private sector, compared with 6.3% in the public sector, although the latter is being boosted by the timing of pay awards. ONS survey feedback also continues to suggest that smaller firms are finding higher labour costs a constraint on recruitment. 

“A fall in headline unemployment will be welcomed by the Prime Minister ahead of the Budget next week, but the underlying figures stress that the labour market still faces challenges. The Budget may bring some targeted interventions, but don’t be surprised if the bulk of structural measures around youth inactivity and disability are held until the Milburn and Timms reviews are complete later in the year.”