UK pay growth slows in June as job vacancies hit five-year low 2026

Daniel Harrolds

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UK pay growth slowed to 4.1% in June, while job vacancies hit a five-year low, signaling a cooling labor market. The latest Office for National Statistics (ONS) data reveals that average total earnings growth, including bonuses, fell from 4.4% in the three months to May to 4.1% in the three months to June. This slowdown has prompted economists to suggest the Bank of England may hold off on raising interest rates this year.

UK Pay Growth Trends in 2026

Regular wage growth, excluding bonuses, strengthened slightly from 3.4% to 3.5%, but this was below City forecasts. The private sector saw a more pronounced easing, with pay growth excluding bonuses slowing to 2.8%—the weakest rate since October 2020. In contrast, public sector pay growth rose to 6.1%, reflecting the timing of NHS pay awards, which distorts the overall figure.

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Private vs. Public Sector Pay Growth

The divergence between private and public sectors is stark. While public sector workers benefited from delayed pay settlements, private sector employers are tightening budgets amid rising costs and economic uncertainty.

Metric	Private Sector	Public Sector
Pay growth (ex-bonuses)	2.8%	6.1%
Trend	Easing	Elevated

Job Vacancies Hit Five-Year Low

Vacancies fell to 707,000 in May to July, down 6,000 from the previous quarter and the lowest level since spring 2021. Small businesses, in particular, are warning of rising employment costs, which is dampening hiring intentions. This weakness in private sector hiring suggests the labor market is losing momentum.

Implications for Interest Rates

Economists at ING noted that ongoing weakness in private sector hiring and wage growth means the bar remains high for a rate hike in 2026, unless energy prices spike severely. The Bank of England will likely monitor these trends closely as it balances inflation control with economic growth.

Key Takeaways

UK pay growth slowed to 4.1% in June, down from 4.4% in May.
Job vacancies hit a five-year low at 707,000.
Private sector pay growth eased to 2.8%, the weakest since 2020.
Public sector pay growth rose to 6.1% due to NHS pay timing.
Bank of England may delay interest rate hikes.

FAQ

What is the current UK pay growth rate?

As of June 2026, UK pay growth (including bonuses) stands at 4.1%, down from 4.4% in the previous three-month period.

Why are job vacancies at a five-year low?

Vacancies have fallen to 707,000 due to rising employment costs and economic uncertainty, particularly affecting small businesses and private sector hiring.

Will the Bank of England raise interest rates?

Given the slowdown in pay growth and hiring, economists believe the Bank of England is unlikely to raise rates in 2026 unless energy prices spike sharply.

Author

Daniel Harrolds

With a career spanning four decades, Daniel is almost a library in the field of precious metals investing and Gold IRAs. His insightful strategies and pragmatic results-oriented approach make him a resource in safeguarding wealth, and financial foresight.

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