The Office for National Statistics put UK vacancies at 691,000 for July to September 2026, down 21,000 on the previous quarter and the first total below 700,000 since February to April 2021. Firms with 1 to 9 employees account for the whole of that quarterly fall, and the ONS says feedback from its Vacancy Survey suggests smaller firms may not be recruiting because of higher labour costs.
What the vacancy numbers show
The figures come from the ONS Vacancies and jobs in the UK bulletin for October 2026, published on 20 October. The quarterly fall of 21,000 (2.9%) matches the size of the fall in January to March 2026, and over the year vacancies are down 37,000 (5.1%). The ONS notes that the quarterly change sits within its confidence interval of roughly plus or minus 32,000 vacancies, so the direction is clearer than the precise size.
The decline was broad. Vacancies fell in 14 of the 18 industry sectors, led by construction, down 7,000 or 20.5%. By employer size, four of five bands fell. The only band that rose was businesses with 250 to 2,499 employees, up 2,000 vacancies (1.2%).
The fall sits in the smallest firms
Businesses with 1 to 9 employees lost 21,000 vacancies in the quarter, a drop of 21.1% to 77,000. Outside the pandemic, the ONS says that is the lowest level for this size band since June to August 2013. Over the year the same band is down 38,000 (32.8%). Every other size band moved by 1,000 or 2,000 on the quarter.
The total fell by 21,000 and the smallest band fell by 21,000, so the other four bands together moved by only a few thousand. For an HR team at a company with a few hundred staff or more, the quarterly vacancy count has barely moved. For the small-firm labour market it has moved a lot.
The wider labour market is steady
The ONS labour market overview published the same day describes a market that “remains broadly flat in 2026”. The unemployment rate was 4.7% for June to August 2026, down 0.1 percentage points on the year and the quarter. The employment rate for people aged 16 to 64 was 75.3%, up 0.2 points on both measures. The ONS counted 2.4 unemployed people per vacancy, the same ratio as a year earlier.
Payrolled employees tell a softer story. HMRC-based data show payrolled employees down 111,000 (0.4%) between August 2025 and August 2026. The early estimate for September is 30.3 million, up 13,000 on August and down 66,000 (0.2%) on the year, and the ONS says the September figure is provisional and likely to be revised.
Pay growth is steady rather than rising. Annual growth in regular earnings was 3.7% for June to August 2026 and has been relatively stable over six consecutive three-month periods. After adjusting for inflation using CPIH, regular pay grew 0.6% on the year. Public sector regular pay grew 6.3% against 3.0% in the private sector, a gap the ONS links in part to the timing of public sector pay awards.
What the ONS says about the cause
The ONS attributes the small-firm pattern to feedback, and it chooses its words with care. It says the Vacancy Survey “continues to suggest that smaller firms may not be recruiting because of increases in labour costs”. It does not name a specific cost, and it does not claim to have measured the cause. Readers should treat labour costs as the survey’s working explanation.
That matters for UK employers because recent policy changes add to employment costs and obligations at the same time. Our earlier coverage of three employment rights changes arriving before 2027 sets out the compliance side. The doubling of the tribunal claim window to six months from 1 October lengthens the period in which a hiring or dismissal decision can be challenged. Neither the ONS bulletin nor those pieces link the two, and nothing in the data shows a causal path from one to the other.
The government has also been paying for entry-level hiring. We reported on the £2,000 hiring payment for young apprentices reaching small firms. The new vacancy figures show where such schemes land: in the size band with the lowest vacancy count in more than a decade.
What it means for the HR leader
In our reading, the practical effect depends on which side of the headcount line a company sits.
- At firms with 1 to 9 employees, the ONS data describes fewer open roles and a survey-reported link to labour costs. Owners and the people who support them should expect fewer competing postings and plan hiring around budget.
- At firms with 250 to 2,499 employees, vacancies edged up by 2,000 in a market where the ratio of unemployed people to vacancies is unchanged on the year. Recruiters there are not seeing a sudden fall in competing demand.
- In construction, where the quarterly fall was steepest, talent teams should check whether their own pipeline reflects a lower number of open roles across the sector or only their own requisitions.
The ONS also warns that its Labour Force Survey estimates carry quality caveats and advises users to focus on long-term movements in the data. One quarter’s vacancy count is a data point, and the next release is due on 17 November.
Actions for the next two weeks
- Pull your own requisition counts for July to September and compare them with the size band you sit in. Note whether you moved with or against it.
- Separate roles frozen for budget reasons from roles closed because they were filled. The ONS data cannot make that split for you.
- If you serve small-firm clients or employees, ask which hiring costs they cite, and compare their answers with the ONS description before building a plan on it.
- Mark 17 November in the planning calendar and wait for a second quarter of data before changing headcount assumptions.
