London Labour Market Update
June 2026
The latest labour market bulletin from the Office for National Statistics (ONS) suggests that labour market conditions in London have continued to improve in recent months, although some indicators remain weaker than a year ago.
London’s unemployment rate fell again in the three months to April 2026, while the employment rate increased. Although economic inactivity rose slightly in the latest quarter, it remained below the UK average. Workforce Jobs data also pointed to growth in the number of jobs during the first quarter of the year, with the strongest increases recorded in real estate, health, transport and storage, and construction.
The most timely PAYE estimates suggest a marginal decline in the number of payrolled employees in May 2026. However, the April estimate was revised upwards substantially in the latest release, indicating a more stable picture than earlier estimates suggested. Real wages also continue to rise as pay growth remains above inflation, although the pace of growth has moderated in recent months.
Despite recent improvements, some signs of weakness remain. Unemployment is still higher than normal in London, workforce jobs remained below their level a year earlier and online job postings volumes are low even after accounting for seasonality.
Due to recent data volatility, we adopt ONS’ prudent language when reporting quarterly changes in employment rates, unemployment rates 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 latest workforce jobs figures for March 2026 showed an increase of 43,700 since December 2025 but were down by 24,700 on the year.
The most timely estimate of payrolled employees (subject to revision) showed a decrease of 1,560 (less than 0.1 pp) in the number of payrolled employees in London between April and May 2026, and a decrease of 1.0% on the year.
The employment rate in London was estimated at 74.2% for the three months ending April 2026, a decrease of 0.2pp on the same period in the previous year, and an increase on the quarter. London’s employment rate was lower than the UK average (75.0%).
London’s unemployment rate was estimated at 6.6%, a decrease on the quarter and an increase of 0.2pp 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 20.3%. This was a decrease of 0.3pp on the previous year, and an increase on the quarter. It is lower than the UK-wide estimate of 21.0%.
Workforce jobs in London
The Workforce Jobs series provides quarterly estimates of the
number of jobs in the UK and is the preferred source of jobs broken down
by region of workplace and industry. The two main categories of
employment are employee jobs and self-employed jobs.
Latest data
The latest data for March 2026 show that:
The total number of workforce jobs in London was estimated at 6.5 million, up 43,700 jobs on the quarter but down 24,700 on the year.
Employee jobs rose by 20,800 on the quarter while self-employed jobs rose by 22,700, with government trainees and HM Forces accounting for the balance.
On the year, employee jobs rose by 9,080 and self-employment jobs fell by 23,800.
Source: ONS Workforce Jobs.
Note: The margin of error for all
jobs is +/- 1.6% for London and +/- 0.6% for the UK. March 2020
indicated by dotted line.
Sector changes
The change in the number of workforce jobs varies by sector of London’s economy. Between March 2025 and March 2026*:
Overall, workforce jobs fell by 0.4% in London between March 2025 and March 2026, slightly more than the UK average (-0.3%).
Manufacturing recorded the largest percentage decrease in jobs in London (-11,500 jobs or -8.6%). This was followed by Arts & recreation (-14,300 jobs or -6.6%) and Hospitality (-15,900 jobs or -3.5%).
The following industry groups shown in the chart saw the largest positive percentage change in jobs in London: Real estate activities (+13,700 jobs or 9.1%), Health (+30,800 jobs or 4.4%) and Transport & storage (+10,300 jobs or 3.7%).
Source: ONS Workforce Jobs.
Note: The margin of error for all
jobs is +/- 1.6% for London and +/- 0.6% for the UK.
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 May 2026, a fall of 1,560 from April.
The latest London estimate represents a decrease of 42,800 (1.0%) on the previous year (May 2025) compared to a decrease of 0.4% UK-wide.
Monthly HMRC PAYE estimates tend to be more heavily revised around the start of new tax years. The figure for March has been revised upwards by around 6,500 employees and April has been revised upwards by around 15,000 employees from the flash estimate reported in May. Consequently, the estimated month-on-month fall between March and April 2026 has been revised to 15,000 employees, rather than the roughly 24,000 decline that we reported last month.
Compared to the pre-pandemic (February 2020) level, the number of payrolled employees in London was up by 190,000 or 4.6%. This compares to an increase of 4.1% across the UK.
The figures for May 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.
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 May 2026:
Median monthly pay in London was £3,080, an increase of 4.3% on the year.
In the UK overall, median pay was £2,630, up by 4.6% 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 May 2025 to May 2026:
Northern Ireland was the region/country with the lowest growth in median monthly salary at 4.0%. London has the second lowest median monthly salary growth at 4.3%.
The region/country with the highest growth in median monthly salary was Scotland at 5.3%.
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 May 2026, the latest month for which CPIH inflation data is available:
The year-on-year CPIH rate in the UK was 3.0%.
Nominal employee pay was up by 4.3% on the year in London, resulting in an increase of approximately 1.3% in real pay on the year.
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).
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 March 2026 to May 2026, we estimate the annualised growth rate of real pay in London to be -0.5%.
This is lower than the previous quarter (January 2026 - March 2026) when the annualised growth rate of real pay in London was 5.1%, suggesting that real pay growth has slowed in recent months, although it remains positive.
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, as new data is released by the ONS/HMRC. This month’s release contains new data on the number of payrolled employees by industry. Previous releases of changes by age group and local authority are also included for reference.
Change by industry
Comparing April 2026 to the same time last year:
Finance & insurance saw the highest percentage growth in payrolled employees at 2.2%, followed by Transport & storage (0.5%) and Public admin & defence (0.3%).
Hospitality saw its number of payrolled employee jobs fall, with a decrease of 4.3%, followed by Construction (down by 2.9%) and Information & communication (down by 2.6%).
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 March 2026 to levels the previous year:
The number of employees aged 18-24 was down by 1.7%. In contrast, the UK overall saw a slight increase (0.2%).
The number of employees aged 25-34 also fell by 1.4% in London, which is a smaller fall than the UK’s (1.7%).
The number of employees aged 35-49 changed only slightly over the year in London.
In London and the UK, we see a rise in the number of payrolled employee jobs held by people aged 50+.
Source: HM Revenue and Customs – Pay As You Earn Real Time
Information.
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 February to April 2026:
The 16-64 employment rate in London was estimated at 74.2%; this is stable from a year earlier, and an increase on the quarter.
The margin of error for the London employment rate is ±1.3%, which 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 75.0%, also stable on the year, and a decrease on the quarter.
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 ±1.2% to ± 2.5% 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 February to April 2026:
The unemployment rate for London was estimated at 6.6%. This represents an increase of 0.2pp from a year earlier, and a decrease on the quarter.
The UK unemployment rate was estimated at 4.9%, an increase of 0.3pp on the year, and a decrease on the quarter.
London and UK rates
Source: ONS Labour Force Survey.
Note: The margin of error is
±0.9% 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 ±1.4% across regions.
Economic inactivity rate
The economic inactivity rate is the proportion of 16 to 64 year olds not in work and either not looking for or 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 February to April 2026:
The rate of economic inactivity in London was estimated at 20.3%. This represents a decrease of 0.3pp from a year earlier, and an increase compared to the previous quarter.
The UK rate of economic inactivity was 21.0%. This represents a decrease of 0.3pp on the year, and an increase on the quarter.
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 continued to ease in May and are now at their lowest level in some time outside of the usual seasonal troughs in August and December, indicating softer hiring demand.
Latest job posting estimates suggest there were about 100,000 unique online postings for jobs in May 2026 (single-month estimate). This was a decrease of around 17,000 compared to May 2025 and a decrease of 6,300 compared to February 2026.
The three-month average for May 2026 was about 108,000 postings. That is a rise of around 3,800 from February 2026 and a fall of 6,400 on May 2025.
Postings for jobs in London
Source: Lightcast.
Note: 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 May 2026:
There were 355,000 people claiming unemployment-related benefits in London, equal to a seasonally adjusted claimant rate (as a proportion of residents aged 16 to 64) of 5.7%. The number of claimants in London was a decrease of 3,970 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 between 16 and 24 (+6.8%). This remains lower than the UK percentage increase in the number of claimants over the last year for that group (+10%).
The UK’s claimant rate was 3.9%. 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.
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. Claimant Count
numbers for the period May 2024 to November 2024 were affected by the
rollout of a higher administrative earnings threshold for full
work-search conditionality. This change would have raised the number of
claimants and raised year-on-year increases in the claimant rate in some
periods.
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. The 30–34 age category is not shown at the London level as
the year-on-year change is less than 0.1%. Note that Claimant Count
numbers for the period May 2024 to November 2024 were affected by the
rollout of a higher administrative earnings threshold for full
work-search conditionality. This change would have raised the number of
claimants and raised year-on-year increases in the claimant rate in some
periods.
Summary of headline indicators
Headline estimates for Feb 2026-Apr 2026 | Number* (thousands) | Rate** (%) | ||||||||
|---|---|---|---|---|---|---|---|---|---|---|
Latest Estimate | Change on Quarter | Change on Year | Latest Estimate | Change on Quarter | Change on Year | |||||
Employment | ||||||||||
London | 4,904 | 67 | t | 80 | t | 74.2 | 0.5 | t | 0.0 | v |
England | 29,356 | 98 | t | 405 | t | 75.4 | 0.0 | v | 0.0 | v |
UK | 34,410 | 100 | t | 399 | t | 75.0 | 0.0 | v | 0.0 | v |
Unemployment | ||||||||||
London | 346 | -70 | u | 18 | t | 6.6 | -1.3 | u | 0.2 | t |
England | 1,570 | -116 | u | 136 | t | 5.1 | -0.4 | u | 0.4 | t |
UK | 1,764 | -105 | u | 124 | t | 4.9 | -0.3 | u | 0.3 | t |
Economic Inactivity | ||||||||||
London | 1,277 | 31 | t | -9 | u | 20.3 | 0.5 | t | -0.3 | u |
England | 7,580 | 145 | t | -82 | u | 20.5 | 0.4 | t | -0.4 | u |
UK | 9,136 | 137 | t | -51 | u | 21.0 | 0.3 | t | -0.3 | u |
Source: ONS Labour Force Survey. Quarter on quarter changes must be interpreted very cautiously, especially for London, given the recent volatility of estimates. | ||||||||||
Measuring the labour market
The ONS has published its latest labour market update covering Labour Force Survey (LFS) data for the three months ending April 2026 and real-time information (RTI) data up to May 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.