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Introduction: UK joblessness rate declines in pre-budget lift

Good morning and welcome to our continuous updates on business, financial markets and the global economy.

The UK joblessness rate has declined in a pre-budget lift for chancellor John Healey yet the count of openings for workers keeps shrinking.

The newest figures on the UK labour market released today show the UK joblessness rate fell to 4.7 percent in June to August down from 4.9 percent a month earlier.

That is better than forecast as City economists had predicted a climb to 5 percent.

In its last look at Britain jobs scene before the budget in two weeks the Office for National Statistics states employment increased by 102000 roles to 34.577m in the latest quarter.

The count of people without work dropped by 47000 in the quarter to 1.712m and there was a minor 16000 decline in the number of people economically inactive to 9.091m.

Yet concerningly the count of openings has seen its biggest drop since the start of the year falling by 21000 in the latest quarter.

That brought the count of openings down to 691000 in July to September down from over 1.2m in early 2022. This marks the first time the total has been below 700000 since February to April 2021.

The ONS states:

This stems mainly from smaller firms which continue to indicate they may not be hiring due to higher labour costs.

That refers to the increased employer National Insurance Contributions brought in by Healey predecessor Rachel Reeves and the rise in the minimum wage which have raised the expense of taking on staff.

More to follow.

The agenda

7am BST: UK labour market data
10am BST: ZEW index of eurozone economic sentiment
10am BST: Eurozone construction output for August
2.30pm BST: BIST Committee questions Secretary of State Jonathan Reynolds

Key events

10m agoSouth Korean data centre firm Elice drops sharply in trading debut
1h agoMcFadden: UK employment rate now the third highest in the G7
1h agoPound surges after UK jobs report
2h agoUK facing jobs drought as openings fall
2h agoPublic sector pay exceeds private sector but....
2h agoReal wage growth stays weak
2h agoA mixed outlook on wage growth
2h agoConstruction drove decline in openings
2h agoIntroduction: UK joblessness rate declines in pre-budget lift

South Korean data centre firm Elice drops sharply in trading debut

Over in Seoul shares of data-centre infrastructure company Elice fell sharply as it began trading.

Elice hopes of making a strong market entry turned into a sharp decline as its shares closed the first trading day down 32 percent raising concerns that the AI boom might be slowing.

According to Bloomberg data this is the worst-ever first day for a sizable Korean IPO.

Bloomberg reports:

Elice debut comes at a time when sentiment toward AI infrastructure companies has weakened particularly in the US said Albert Yong managing partner and chief investment officer at Petra Capital Management. Sentiment toward AI infrastructure has been highly volatile and often disconnected from underlying fundamentals.

Elice describes itself as an AI Full Stack Company providing AI education cloud infrastructure and other services which organizations need for AI transformation.

It has already been a turbulent year for the Korean stock market. The KOSPI index doubled in value in the first half of 2026 but then fell by almost a fifth in July-September.

Shares have eased in London and across Europe in early trading as the political crisis in France concerns investors.

The FTSE 100 share index has dropped by 45 points or 0.42 percent to 10719 points adding to yesterday losses.

That has helped to pull the pan-European Stoxx 600 index down by 0.4 percent. France CAC index has lost 0.3 percent while Germany DAX is down 0.7 percent.

Investors remain concerned that the protests that shook France last weekend will hinder efforts to cut spending.

Capital Economics told clients:

France appears to be heading for a fiscal crisis which could lead to contagion and potentially a recession in the euro-zone. However several factors mean the contagion risks to other countries bond markets and economies are lower than they were during the sovereign debt crisis of the early 2010s.

McFadden: UK employment rate now the third highest in the G7

Secretary of State for Work and Pensions Pat McFadden says:

Today figures show the resilience of our labour market with unemployment falling and the UK employment rate now the third highest in the G7 despite a backdrop of global uncertainty.
But too many young people still find themselves locked out of employment. That is why we are working with industry to bring young people back into the labour market and prevent them from drifting into the welfare system.
The hospitality and retail sectors have committed to 200000 jobs for young people not in education work or training through this partnership to give them the opportunities they need to get started and build a successful career.

Pound surges after UK jobs report

The pound has rallied after Britain joblessness rate fell unexpectedly this morning to 4.7 percent.

Sterling has gained half a cent against the US dollar to 1.3352 as the City welcomes the news that employment rose in the last quarter.

The pound is also up 0.2 percent against the euro to 1.1888 close to the 17-month high touched yesterday.

Traders may be concluding that a stronger-than-expected jobs market will give the Bank of England confidence to raise interest rates to fight inflation.

Chris Beauchamp chief market analyst at IG says sterling is rampant after the UK employment data.

This data has caught the market on the hop with traders scrambling to respond and boost exposure to the pound. Good news has been a touch more prevalent for the UK of late which is just the kind of framing the government needs heading into the budget though signs of more resilience in the labour market do of course mean the BoE has more room to respond to higher inflation.

The money markets indicate there is a 95.5 percent chance that the Bank raises interest rates at its next meeting in November to 4 percent. Three further rate rises are expected in 2027.

Here is Stephen Evans chief executive at Learning and Work Institute on the situation in the UK jobs market:

The labour market remains relatively flat overall. This resilience in the face of headwinds driven by global events is welcome. But underlying problems remain with around one million young people not in education employment or training and overall employment more than two million short of the Government 80 percent employment rate target.
To fix those challenges we need to change the benefit system so it offers active help to all who need it but also make it easier for employers to create jobs.

Another interesting line in today jobs report is that the number of workers on company payrolls has risen.

Payrolls increased by 13000 in September to around 30.3m.

But that is still 66000 lower than a year ago.

UK facing jobs drought as openings fall

The government should not be complacent about the state of the labour market ahead of next week budget warns Ben Harrison director of the Work Foundation at Lancaster University.

Harrison explains:

The UK is still amidst a jobs drought with vacancies at their lowest for over 12 years outside of the pandemic.
In particular there are now 715000 young people aged 16 to 24 unemployed down by 28000 on the quarter. Nevertheless the number of young people out of work remains 54000 higher than 12 months ago.
For too many young people there are simply not enough suitable jobs available to them. Overall vacancies have fallen to 691000 the lowest level outside the pandemic since 2014 while Work Foundation research shows that adverts for starter jobs have almost halved over the past.

Here is ONS deputy director of labour market statistics David Freeman on today jobs data:

While the labour market remains broadly flat in 2026 data from the latest quarter shows the employment rate edging up and a small drop in unemployment. The number of workers on payroll remains slightly down over the same period though data for the most recent month suggests that might be starting to level off.
The number of vacancies has seen its largest fall since the start of the year concentrated mainly within smaller businesses which cite increased labour costs as a key factor.
Regular wage growth remained relatively stable though total pay including bonuses has eased to its lowest rate in nearly six years.

Public sector pay exceeds private sector but....

Pay continued to rise faster in the public sector than in the private sector today labour market report shows.

Regular annual growth was 3.0 percent for the private sector and 6.3 percent for the public sector.

But as the ONS points out public sector pay growth continues to be affected by variations in the timings of pay awards this year largely to do with pay deals in the NHS.

Real wage growth stays weak

Once you account for inflation UK real wage growth remained below 1 percent last month.

Annual real regular pay growth was broadly unchanged at 0.8 percent in June to August the ONS reports based on the CPI inflation measure.

Annual real total pay growth using CPI was 0.9 percent in June to August 2026 a slight decrease.

A mixed outlook on wage growth

Regular pay growth rose in the last quarter today labour market report shows.

But once you account for bonuses wage growth slowed.

The ONS reports that regular pay grew by 3.7 percent in the June-August quarter up from 3.6 percent a month ago.

But growth in total pay including bonuses was 3.7 percent in June to August 2026 down from 3.9 percent in May-July.

Construction drove decline in openings

Openings fell particularly sharply across the construction sector suggesting Britain builders cut back on hiring last summer.

The ONS reports:

Vacancy estimates decreased on the quarter with early estimates for July to September 2026 suggesting a decrease of 21000 2.9 percent openings to 691000 compared with April to June 2026; this is the first time the total has been below 700000 since February to April 2021.
Vacancy estimates decreased in 14 of the 18 industry sectors compared with April to June 2026; the largest industry decrease was in construction down 7000 openings.
Vacancy estimates decreased in 4 of the 5 employment size bands compared with April to June 2026; the largest decrease was for businesses with 1 to 9 employees down 21000 openings.