Britain’s labour market is sending conflicting signals ahead of the Budget: unemployment has edged down and employment has risen, but vacancies have fallen to a level not seen outside the pandemic for more than a decade.

Right-wing coverage emphasises the pressure on employers rather than treating the 4.7% unemployment rate as a clear turnaround. Vacancies fell by 21,000 to 691,000 in the three months to September, with the Office for National Statistics saying the largest fall since the start of the year was concentrated in small businesses. The ONS said those firms cited “increased labour costs as a key factor” in holding back recruitment.¹

The more encouraging indicators point in the other direction. Regular pay grew 3.7%, or 0.8% after inflation, while the employment rate for 16- to 64-year-olds rose to 75.3%. Economic inactivity also slipped to 20.9%, according to the figures reported ahead of the Budget.²

But the reports converge on a more cautious reading of the hiring outlook. Payroll employment rose by only 1,000 between July and August, while employers were described as limiting recruitment to roles considered essential for productivity and growth. Lee Chant of ManpowerGroup UK said the headline data did not capture current sentiment, with employers and workers “holding their breath ahead of the Autumn Budget” before making major decisions.²

The contrast is especially stark for younger people. Separate figures cited in the coverage put the number of 16- to 24-year-olds outside employment, education or training at almost one million. That leaves the fall in unemployment as a limited reassurance: the figures suggest a labour market that is still adding jobs and delivering real wage growth, but one in which cost pressures and uncertainty are restraining new opportunities.¹