Dip in West Midlands unemployment as small business rein in hiring

Rates of unemployment in the West Midlands have fallen slightly while UK small businesses are pulling back on hiring, official figures show.

Monthly job stats for the region published today by the Office for National Statistics (ONS) also show a slight rise in the rate of employment but also a rise in inactivity.

For the three months from March to May 2026, the percentage of people aged 16 or over who were unemployed was 5.2 per cent, a decrease of 0.5 per cent compared with the period from November to February.

A total of 73.4 per cent of 16 to 64 year olds in the West Midlands were in work, a rise of 0.2 per cent compared with the same quarter.

The inactivity rate among 16 to 64 year olds was 22.6 per cent, an increase of 0.4 per cent over the same three months.

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Nationally, job vacancies have fallen back further as under-pressure small businesses rein in hiring in the face of rising costs and higher wage bills.

The data from the ONS said regular average wage growth in the private sector also fell below three per cent for the first time since 2020, at 2.9 per cent in the three months to May.

The latest figures showed there were 7,000 fewer vacancies in the quarter to June at 712,000, which follows a 19,000 drop in the previous three months.

This was driven by smaller businesses, which saw vacancies fall 8,000, though this was partially offset by an increase among medium-sized firms, the ONS said.

But the latest figures showed Britain's overall rate of unemployment held steady at 4.9 per cent in the three months to May, while the number of workers on UK payrolls fell by a better-than-feared 4,000 between May and June to 30.3 million.

Despite the drop in private sector earnings growth, overall regular wage growth remained unchanged at 3.4 per cent in the quarter to May thanks to a 5.5 per cent increase across the public sector, which the ONS said was affected by the timing of recent NHS pay awards.

Regular earnings also continued to outstrip inflation, up 0.4 per cent with the Consumer Prices Index taken into account.

Liz McKeown, ONS director of economic statistics, said: "The latest data shows a relatively steady labour market picture overall, though some measures continue to suggest softening.

"Vacancies fell again over the quarter but by less than in recent periods. The latest decrease was driven mainly by smaller businesses where labour and operating costs were cited as factors in not taking on new staff."

Experts said the figures signalled the worst of the jobs market decline may be over but cautioned over a possible further hit if the ongoing Iran war sends inflation soaring.

Matt Swannell, chief economic adviser to forecast group Item Club, said: "There are some signs that the deterioration in the labour market has bottomed out.

"But we think this will prove a temporary respite and, with a sustained reduction in the use of Strait of Hormuz looking increasingly likely, we expect high energy prices to weigh on growth and the jobs market."