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The UK unemployment rate dropped more than expected to 4.9% in the three months to February, though pay growth fell to its lowest level in five years, according to the Office for National Statistics (ONS).
Annual growth in regular earnings, which excludes bonuses, fell to 3.6% over the period, down from 3.8% in January and the lowest level since November 2020.
Elsewhere, vacancies fell by 29,000 to 711,000 in the first quarter of 2026, marking the lowest level of vacancies recorded since the spring of 2021, following a period of broadly flat estimates.
Economic inactivity for those aged 16 to 64 was estimated at 21.0% for the same period. While this is an increase on the previous quarter, the rate remains below levels recorded one year ago.
The number of payrolled employees fell by 74,000 between February 2025 and February 2026. According to the ONS, early estimates for March 2026 suggest a further monthly decrease of 11,000 to 30.3 million.
ONS director of Economic Statistics, Liz McKeown, said: “The number of workers on payroll remained broadly flat in recent periods, reflecting ongoing weak hiring. Vacancies fell to their lowest level in almost five years, but with unemployment also falling the number of vacancies per unemployed person remains broadly unchanged.
“Alongside falling unemployment, the number of people not actively seeking work increased, with data suggesting fewer students seeking work alongside their studies. Regular wage growth has slowed further with growth at its lowest rate in over five years.”
