UK Payrolls Fall for Seventh Month

The UK labor market continued to weaken in August 2026, with payroll employment declining for a seventh consecutive month. The number of payrolled employees fell by 26,000 from July to 30.2 million, marking the largest monthly decline since November 2025.

Retail Sector Leads Job Losses

Compared with August last year, payroll employment decreased by 145,000, or around 0.5%. However, employment trends varied considerably across sectors.

Wholesale and retail trade recorded the largest annual decline, losing 76,000 jobs, while administrative and support services added 72,000 employees.

Regional differences were also significant. Payroll employment fell by around 2% in Camden and the City of London, while the Causeway Coast and Glens region recorded growth of 1.1%.

Wage Growth Continues

Despite weaker employment, wages continued to rise. Median monthly pay increased 3.5% year-on-year to £2,657. Construction recorded the strongest wage growth at 5.5%, while median earnings in education declined by 0.4%.

Labor Market Weakness Puts Focus on BoE

Seven consecutive months of falling payroll employment could raise concerns about the outlook for UK economic growth and household spending.

At the same time, continued wage increases remain relevant for inflation. This leaves the Bank of England facing competing signals, with persistent wage pressures supporting caution on inflation while weakening employment could limit the case for further monetary tightening. Labor market developments will therefore remain an important factor in upcoming BoE interest rate decisions.