The latest labour market bulletin from the Office for National Statistics (ONS) points to a tepid but stabilising labour market in London. Key indicators continue to underperform the rest of the UK, but the pace of decline appears to be slowing.


On a quarterly basis, the employment and unemployment rates have both declined, while the inactivity rate has risen. This may suggest that the decline in the unemployment rate is being driven by people leaving the labour force and becoming inactive. However, the ONS urges caution when interpreting short-term movements, given the data volatility issue in the Labour Force Survey.


The more timely PAYE estimates point to a continuation of the downward trend of the last 18 months. Compared with a year ago, the largest losses are concentrated in hospitality, information and communication, and construction. On pay, London workers are still experiencing real (inflation-adjusted) wage growth, although this might be a composition effect as low-paid industries reduce employment.


The other highly-timely indicator, job posting data, points to a subdued but stable labour market. Monthly new job posting volumes have fluctuated around roughly 100,000–120,000 this year, rather than showing a persistent downward trend.


Overall, London’s labour market remains weak with indicators suggesting it is stabilising at a lower level of activity.


Due to recent data volatility, we adopt ONS’ prudent language when reporting quarterly changes in employment, unemployment and inactivity rates. The focus should be on the general movements rather than the exact figures. As data collection improvements feed into published results, there is a possibility of further revisions. This report uses several data sources and indicators, which need to be taken together to get a reliable picture of London’s labour market.



Summary of key points


  • The most timely estimate of payrolled employees (subject to revision) showed a decrease of 6,600 (-0.2 percentage points) in the number of payrolled employees in London between June 2026 and July 2026, and a decrease of 0.8% on the year.

  • The employment rate in London was estimated at 73.9% for the three months ending June 2026, a decrease of 1.0pp on the same period in the previous year, and a decrease on the quarter. London’s employment rate was lower than the UK average (75.1%).

  • London’s unemployment rate was estimated at 6.5%, a decrease on the quarter and an increase of 0.5pp from a year earlier. The UK average was 4.9%.

  • London’s inactivity rate (the measure of those not looking and/or not available to work) was estimated at 20.7%. This was an increase of 0.6pp on the previous year, and an increase on the quarter. It is lower than the UK-wide estimate of 20.9%.



Payrolled employees


The count of payrolled employees from HMRC’s Pay As You Earn (PAYE) RTI dataset offers a timely measure of labour market trends:

  • Early estimates indicate that there were around 4.3 million payrolled employees living in London in July 2026, a a decrease of 6,600 from June.

  • The latest London estimate represents a decrease of 33,700 (0.8%) on the previous year (July 2025) compared to a decrease of 0.3% UK-wide.

  • Compared to the pre-pandemic (February 2020) level, the number of payrolled employees in London was up by 196,000 or 4.7%. This compares to an increase of 4.2% across the UK.

The figures for July 2026 in the RTI dataset are provided to give an indication of the likely level of employees as well as median pay in the latest period. They are of lower quality and may be subject to significant revision in future releases.

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Number of payrolled employees

Source: HM Revenue and Customs – Pay As You Earn Real Time Information.

Note: Estimates are based on where employees live. March 2020 indicated by dotted line.


Change on previous year, within London

Source: HM Revenue and Customs – Pay As You Earn Real Time Information.

Note: Estimates are based on where employees live.

Change on previous year, UK regions

Source: HM Revenue and Customs – Pay As You Earn Real Time Information.

Note: Estimates are based on where employees live.


Employee pay and inflation


The RTI dataset also provides information on the nominal monthly pay of payrolled employees living in London. This can be adjusted for inflation to estimate real pay over time.

The median pay is an average which measures the middle point in the range of recorded monthly employee salaries.

In July 2026:

  • Median monthly pay in London was £3,120, an increase of 4.5% on the year.

  • In the UK overall, median pay was £2,640, up by 4.2% on the year.


CPIH (consumer price inflation including owner-occupiers’ housing costs) is a national measure and does not account for region-specific price changes.


Pay by region


The change in median nominal salary on the year varies between the regions and countries of the UK.

From July 2025 to July 2026:

  • Scotland was the region/country with the lowest growth in median monthly salary at 4.3%.

  • The region/country with the highest growth in median monthly salary was Northern Ireland at 5.4%.

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Source: HM Revenue and Customs – Pay As You Earn Real Time Information.

Note: Estimates are based on where employees live.


Annual real pay growth


Growth in real wages can be estimated by adjusting nominal pay for the rate of inflation, here CPIH, giving a better idea of how much wages progress in relation to the cost of living.

In June 2026, the latest month for which CPIH inflation data is available:

  • The year-on-year CPIH rate in the UK was 2.8%.

  • Nominal employee pay was up by 4.6% on the year in London, resulting in an increase of approximately 1.8% in real pay on the year.

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Source: HM Revenue and Customs – Pay As You Earn Real Time Information, ONS.

Note: March 2020 indicated by dotted line. Inflation measure does not account for region-specific price changes. Sign of inflation rates has been reversed (higher inflation rates are associated with lower real pay growth). Inflation data is released after pay data and is not available for the most recent month.


Annualised growth rates


Annual growth rates are a backward-looking measure that indicate the cumulative impact of changes over the previous year. This is an important measure that shows how much wages, or prices have changed in total over the last year.

However, it is also important to understand how fast things are changing at the present time. To do this we show annualised growth rates that measure how fast prices and pay have changed over the last three months.

  • Using the three-month period April 2026 to June 2026, we estimate the annualised growth rate of real pay in London to be 2.7%.

  • This is lower than in the previous quarter (January 2026 to March 2026), when the annualised growth rate of real pay in London was 4.4%, suggesting that real pay growth has slowed in recent months, although it remains positive.

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Source: HM Revenue and Customs – Pay As You Earn Real Time Information, ONS.

Note: March 2020 indicated by dotted line. Inflation measure does not account for region-specific price changes.


Additional payrolled employee statistics


The tabs below are each updated once per quarter on a rolling basis, as new data is released by the ONS/HMRC. Previous releases are included for reference.


Change by industry

Comparing July 2026 to the same time last year:

  • Administration saw the highest percentage growth in payrolled employees at 2.5%, followed by Finance & insurance (1.4%) and Arts & recreation (1.0%).

  • Hospitality saw its number of payrolled employees fall, with a decrease of 3.2%, followed by Information & communication (down by 2.7%) and Construction (down by 2.5%).

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Source: HM Revenue and Customs – Pay As You Earn Real Time Information.

Note: Estimates are based on where employees live. Excludes sectors with fewer than 25,000 payrolled employees in London.


Change by age group

Recent changes in the number of payrolled employees vary by age group. Comparing June 2026 to levels the previous year:

  • Employees aged 18–24: The number fell by 1.5% in London, while it changed only slightly across the UK, by 0.4%.

  • Employees aged 25–34: The number fell by 1.9% in both London and the UK.

  • Employees aged 35–49: The number changed only slightly in both London and the UK, by 0.8% and 0.7% respectively.

  • Employees aged 50–64: The number changed only slightly in both London and the UK, by 0.1% and 0.7% respectively.

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Source: HM Revenue and Customs – Pay As You Earn Real Time Information.

Note: Estimates are based on where employees live.



Change by local authority

There is considerable variation in the change in payrolled employees by London local authority. Comparing May 2026 with levels the year before:

  • Most London local authorities recorded a decline in payrolled employees over the year, with falls in 29 of the 33 areas..

  • The number of payrolled employees living in Barking and Dagenham, the borough (incl. the City) with the highest growth, was up by 0.7% on the year.

  • The borough with the biggest decline (excl. the City), Kensington and Chelsea, recorded a decrease of 2.5%.

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Source: HM Revenue and Customs - Pay As You Earn Real Time Information. Contains Ordnance Survey data Crown copyright and database rights [2015].

Note: Estimates are based on where employees live.



Employment rate


Employment measures the number of people aged 16 and over in paid work and those who had a job that they were temporarily away from (for example, because they were on holiday or off sick). The employment rate is the proportion of people aged between 16 and 64 years who are in employment.

For April to June 2026:

  • The 16–64 employment rate in London was estimated at 73.9%. This represents a decrease of 1.0pp from a year earlier and a decrease of 0.2pp on the quarter.

  • The margin of error for the London employment rate is ±1.3 percentage points. This suggests that the oscillations over the last two years between around 74% to around 76% do not reflect a significant change in the underlying trend.

  • The overall UK employment rate was estimated at 75.1%. This represents a decrease of 0.2pp from a year earlier and an increase of 0.1pp on the quarter.

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London and UK rates

Source: ONS Labour Force Survey.

Note: The margin of error is ±1.3% for London and ±0.4% for the UK. The LFS has been reweighted from July to September 2022 onwards. September 2022 indicated by dotted line.


Regional comparison

Source: ONS Labour Force Survey.

Note: The margin of error ranges from ±1.1% to ± 2.4% across regions.


Unemployment rate


Unemployment measures people without a job who have been actively seeking work within the last four weeks and are available to start work within the next two weeks. The unemployment rate is the proportion of the economically active population who are unemployed.

For April to June 2026:

  • The unemployment rate for London was estimated at 6.5%. This represents an increase of 0.5pp from a year earlier, and a decrease of 0.8pp on the quarter.

  • The UK unemployment rate was estimated at 4.9%, an increase of 0.2pp on the year, and a decrease on the quarter.

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London and UK rates

Source: ONS Labour Force Survey.

Note: The margin of error is ±0.8% for London and ±0.3% for the UK. The LFS has been reweighted from July to September 2022 onwards. September 2022 indicated by dotted line.


Regional comparison

Source: ONS Labour Force Survey.

Note: The margin of error ranges from ±0.6% to ±1.3% across regions.


Economic inactivity rate


The economic inactivity rate refers to the proportion of people aged 16 to 64 who are not in employment and are either not seeking work or are unable to work. The main categories in this group are students, people who are looking after family/home full-time, and people who cannot work for health reasons (most of whom are long-term sick).

For April to June 2026:

  • The rate of economic inactivity in London was estimated at 20.7%. This represents an increase of 0.6pp from a year earlier, and an increase of 0.7pp compared to the previous quarter.

  • The UK rate of economic inactivity was 20.9%. This represents a decrease of 0.0pp on the year, and a decrease of 0.0pp on the quarter.

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London and UK rates

Source: ONS Labour Force Survey.

Note: The margin of error is not published for London, the UK margin is ±0.3%. The LFS has been reweighted from July to September 2022 onwards. September 2022 indicated by dotted line.


Regional comparison

Source: ONS Labour Force Survey.

Note: The margin of error is not published for regions.


Online job postings


The number of online job postings is an indicator of the demand for labour in London. It is very timely and complements more traditional employment indicators.

We use online job postings data provided by Lightcast. Given the volatility associated with single-month estimates, the three-month average estimates provide a more reliable indication of short-term changes in the demand for labour.

  • Job posting volumes ticked up in June but remained lower than a year ago, indicating softer hiring demand that may be levelling off.

  • Latest job posting estimates suggest there were about 110,000 unique online postings for jobs in July 2026 (single-month estimate). This was a decrease of around 6,500 compared with July 2025, and an increase of around 6,100 compared with April 2026.

  • The three-month average for July 2026 was about 110,000 postings. This was an increase of around 700 compared with April 2026, and a decrease of around 10,700 compared with July 2025.

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Postings for jobs in London

Source: Lightcast.

Note: April 2026 data adjusted for outliers. Data not seasonally adjusted. March 2020 indicated by dotted line.


Claimant count


The Claimant Count is a measure of the number of people claiming benefits principally for the reason of being unemployed. It includes people claiming Jobseeker’s Allowance and those claiming Universal Credit who are required to seek work.

For July 2026:

  • There were 343,000 people claiming unemployment-related benefits in London, equal to a seasonally adjusted claimant rate (as a proportion of residents aged 16-64) of 5.5%. The number of claimants in London was a decrease of -11,100 on the year.

  • The age group with the biggest percentage rise in the number of claimants over the last year in London was those aged 16-24 (+4.9%). The claimant count for the same age group also rose across the UK (+9.7%).

  • The UK’s claimant rate was 3.8%. Up until the early months of the Covid-19 pandemic, London’s claimant rate was in line with the UK’s. A gap opened then and has not closed since.

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Rate of residents aged 16-64

Source: ONS Claimant Count by sex and age (seasonally adjusted).

Note: may include some employed claimants on low hours or earnings. September 2022 indicated by dotted line.


Year-on-year percentage change

Source: ONS Claimant Count by sex and age (not seasonally adjusted).

Note: may include some employed claimants on low hours or earnings.

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Summary of headline indicators


Headline estimates for Apr 2026-Jun 2026

Number* (thousands)

Rate** (%)

Latest Estimate

Change on Quarter

Change on Year

Latest Estimate

Change on Quarter

Change on Year

Employment

London

4,865

-18

u

-29

u

73.9

-0.2

u

-1.0

u

England

29,425

72

t

242

t

75.5

0.1

t

-0.2

u

UK

34,469

84

t

253

t

75.1

0.1

t

-0.2

u

Unemployment

London

339

-45

u

23

t

6.5

-0.8

u

0.5

t

England

1,539

-72

u

46

t

5.0

-0.2

u

0.1

t

UK

1,772

-36

u

88

t

4.9

-0.1

u

0.2

t

Economic Inactivity

London

1,305

46

t

51

t

20.7

0.7

t

0.6

t

England

7,583

50

t

84

t

20.5

0.1

t

0.1

t

UK

9,111

8

t

55

t

20.9

0.0

v

0.0

v

Source: ONS Labour Force Survey. Quarter on quarter changes must be interpreted very cautiously, especially for London, given the recent volatility of estimates.

Notes: All figures are seasonally adjusted. *Numbers are based on total population (16+, male and female), except for inactivity which is 16-64. **Rates are based on working age population (16–64, male and female), except for the unemployment rate which is age 16+.

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Measuring the labour market


The ONS has published its latest labour market update covering Labour Force Survey (LFS) data for the three months ending June 2026 and real-time information (RTI) data up to July 2026. This bulletin presents the latest headline labour market estimates for London.

Please note:

  • Many of the statistics presented here are estimates based on surveys, and as such have a margin of error – known as sampling variability.

  • They also cover different reference periods or count dates.

More information and previous GLA Economics analyses can be found on our labour market analysis page.

More information on the data used and a glossary of terms can be found on the ONS website.

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