Job vacancies in the UK have seen their largest fall since the start of the year as smaller businesses cut back on recruitment, official figures indicate.

Vacancies fell by 21,000 in the three months to September to 691,000, according to the Office for National Statistics (ONS), which said small firms were citing labour costs as a key factor in scaling back hiring.

Energy costs have risen since the Iran war began, and companies have also said that increases in National Insurance and the minimum wage have made it more expensive to employ staff.

The ONS figures also showed the unemployment rate fell to 4.7% in the three months to August, down from the previous figure of 4.9%.

Job vacancies fell to their lowest level in more than five years, the figures indicated, with the largest decrease in construction jobs.

Average earnings excluding bonuses rose 3.7% in the three months to August. Taking inflation into account, wages grew 0.8% in real terms.

ONS deputy director of labour market statistics, David Freeman, said: "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."

Pat McFadden, the Secretary of State for Work and Pensions, said the figures "show the resilience of our labour market" with the UK's employment rate "now the third highest in the G7, despite a backdrop of global uncertainty".

However, he said that "too many young people still find themselves locked out of employment".

The government is working with industry "to bring young people back into the labour market and prevent them from drifting into the welfare system", he added.

The latest ONS figures showed the unemployment rate for those aged 16 to 24 was 15.6% in the June to August quarter. While that was down from 16.4% in the March to May period, it was still higher than the rate of 14.6% seen in the June-to-August period last year.