London Labour Market Update
September 2026
The latest ONS labour market data point to weakness in London’s labour market. Most indicators have deteriorated compared with a year ago, and London continues to underperform the rest of the UK on several headline measures.
On a quarterly basis, London’s employment rate declined, while unemployment and economic inactivity increased. Taken together, these movements point to a cooling labour market, with fewer people in work on this measure and increases in those actively seeking work and those outside the labour force. Over the same period, unemployment and inactivity have remained stable in the UK.
The more timely PAYE estimates reinforce this picture. Payrolled employment continued to fall across both London and the UK in August, with the annual decline in London around twice that seen across the UK and the pace of decline in the capital increasing in recent months.
Workforce Jobs (which include jobs held by non-residents and the self-employed) provide a slightly more positive signal. Although the number of jobs in London fell slightly on the quarter, it remained higher than a year earlier, with stronger annual growth than across the UK.
Overall, London’s labour market has weakened further, although the latest Workforce Jobs data provide some evidence of resilience in labour demand.
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 latest workforce jobs figures for June 2026 showed a decrease of 13,900 (-0.2%) since March 2026 but were up by 19,200 (0.3%) on the year.
The most timely estimate of payrolled employees (subject to revision) showed a decrease of 7,860 (-0.2 percentage points) in the number of payrolled employees in London between July 2026 and August 2026, and a decrease of 1.0% on the year.
The employment rate in London was estimated at 73.9% for the three months ending July 2026, a decrease of 1.4pp 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 6.8%, an increase on the quarter and an increase of 0.7pp 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 20.5%. This was an increase of 0.9pp on the previous year, and an increase on the quarter. It is lower than the UK-wide estimate of 20.9%.
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 June 2026 show that:
The total number of workforce jobs in London was estimated at 6.4 million, down 13,900 jobs on the quarter but up 19,200 on the year.
Employee jobs decreased by 9,700 on the quarter while self-employed jobs fell by 3,900, with government trainees and HM Forces accounting for the balance.
On the year, employee jobs rose by 6,200 and self-employment jobs grew by 11,900.
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 June 2025 and June 2026*:
Overall, workforce jobs rose by 0.3% in London between June 2025 and June 2026, slightly more than the UK average (0.2%).
Manufacturing recorded the largest percentage decrease in jobs in London (-5,350 jobs or -4.2%). This was followed by Hospitality (-15,900 jobs or -3.4%) and Administration (-10,800 jobs or -1.7%).
The following industry groups shown in the chart saw the largest positive percentage change in jobs in London: Arts & recreation (+26,500 jobs or 13.5%), Real estate activities (+7,340 jobs or 4.9%) and Public admin & defence (+7,070 jobs or 2.4%).
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 August 2026, a a decrease of 7,860 from July.
The latest London estimate represents a decrease of 44,500 (1.0%) on the previous year (August 2025) compared to a decrease of 0.5% UK-wide.
Compared to the pre-pandemic (February 2020) level, the number of payrolled employees in London was up by 189,000 or 4.5%. This compares to an increase of 4.1% across the UK.
The figures for August 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 August 2026:
Median monthly pay in London was £3,120, an increase of 3.2% on the year.
In the UK overall, median pay was £2,660, up by 3.5% 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 August 2025 to August 2026:
North East was the region/country with the lowest growth in median monthly salary at 2.3%.
The region/country with the highest growth in median monthly salary was Northern Ireland at 5.6%.
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 July 2026, the latest month for which CPIH inflation data is available:
The year-on-year CPIH rate in the UK was 3.1%.
Nominal employee pay was up by 4.7% on the year in London, resulting in an increase of approximately 1.6% 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). 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 May 2026 to July 2026, we estimate the annualised growth rate of real pay in London to be 3.7%.
This is higher than in the previous quarter (April 2026 to June 2026), when the annualised growth rate of real pay in London was 2.6%, suggesting that real pay growth has accelerated in recent months.
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%).
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:
The number of employees aged 18-24 was down by 1.5% in London. In contrast, the UK overall saw a slight increase (0.4%).
The number of employees aged 25-34 fell by both 1.9% in London and the UK.
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 May to July 2026:
The 16–64 employment rate in London was estimated at 73.9%. This represents a decrease of 1.4pp from a year earlier and a decrease of 0.4pp 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 0.1pp from a year earlier and little change 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 ±1.1% 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 May to July 2026:
The unemployment rate for London was estimated at 6.8%. This represents an increase of 0.7pp from a year earlier, and an increase of 0.1pp on the quarter.
The UK unemployment rate was estimated at 4.9%, an increase of 0.2pp on the year, and an increase on the quarter.
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 May to July 2026:
The rate of economic inactivity in London was estimated at 20.5%. This represents an increase of 0.9pp from a year earlier, and an increase of 0.2pp compared to the previous quarter.
The UK rate of economic inactivity was 20.9%. This represents a decrease of 0.1pp on the year, and a decrease of 0.1pp 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 have remained broadly flat in recent months, suggesting that labour demand is stabilising at a subdued level.
Latest job posting estimates suggest there were about 102,000 unique online postings for jobs in August 2026 (single-month estimate). This was an increase of around 4,300 compared with August 2025, and an increase of around 1,600 compared with May 2026.
The three-month average for August 2026 was about 111,000 postings. This was an increase of around 3,200 compared with May 2026, and a decrease of around 3,500 compared with August 2025.
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 August 2026:
There were 346,000 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 -5,430 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 (+4.4%). The claimant count for the same age group also rose across the UK (+10.0%).
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.
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.
Summary of headline indicators
Headline estimates for May 2026-Jul 2026 | Number* (thousands) | Rate** (%) | ||||||||
|---|---|---|---|---|---|---|---|---|---|---|
Latest Estimate | Change on Quarter | Change on Year | Latest Estimate | Change on Quarter | Change on Year | |||||
Employment | ||||||||||
London | 4,869 | -24 | u | -78 | u | 73.9 | -0.4 | u | -1.4 | u |
England | 29,428 | 63 | t | 207 | t | 75.4 | 0.0 | v | -0.2 | u |
UK | 34,478 | 66 | t | 243 | t | 75.1 | 0.0 | v | -0.1 | u |
Unemployment | ||||||||||
London | 355 | 2 | t | 34 | t | 6.8 | 0.1 | t | 0.7 | t |
England | 1,548 | -17 | u | 39 | t | 5.0 | -0.1 | u | 0.1 | t |
UK | 1,778 | 11 | t | 83 | t | 4.9 | 0.0 | v | 0.2 | t |
Economic Inactivity | ||||||||||
London | 1,293 | 14 | t | 66 | t | 20.5 | 0.2 | t | 0.9 | t |
England | 7,590 | 12 | t | 74 | t | 20.5 | 0.0 | v | 0.1 | t |
UK | 9,121 | -11 | u | 12 | t | 20.9 | -0.1 | u | -0.1 | 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 July 2026 and real-time information (RTI) data up to August 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.