North East unemployment falls to UK average, but inactivity and employment challenges remain

Josh Maratty, policy advisor at the North East Chamber of Commerce, said:

“The latest ONS figures show that unemployment in the North East among people aged 16 and over fell to 4.7% between June and August 2026, down from 5.1% in the previous reporting period and now in line with the UK average.

“While this is encouraging, the wider picture shows there is still considerable work to do. Economic inactivity among those aged 16 to 64 in the region has risen to 25.5%, compared with 24.7% in the previous reporting period, and remains well above the UK average of 20.9%.

“The North East also continues to have the lowest employment rate of any UK region, with the rate for those aged 16 to 64 falling to 70.5% from 71.3%, compared with 75.3% nationally.

“These figures highlight the importance of looking beyond unemployment alone. We need to understand what is preventing people from entering or returning to work and ensure businesses can access the skills and talent they need to grow.

“Nationally, vacancies have fallen by 21,000 to 691,000, their lowest level since early 2021. This decline has been widespread, with vacancies falling across 14 of the 18 industry sectors, including a drop of 7,000 in construction.

“Vacancies also fell across four of the five business size categories, with the sharpest decline among businesses employing 1 to 9 people. This suggests employers across much of the economy are becoming more cautious about recruitment, particularly smaller businesses.

“Tackling these challenges requires closer collaboration between businesses, education providers and policymakers, with a focus on developing skills, removing barriers to employment and creating opportunities for people across the region.”

The Chamber recently concluded its three-part Unlocking the North East Economy Conference Mini Series, bringing together business leaders, policymakers and regional partners to explore the opportunities and challenges shaping the region's future.

Across events in Teesside, Sunderland and Gateshead, discussions focused on improving productivity, developing skills, strengthening trade and investment and creating places where businesses and communities can thrive. The series highlighted the importance of collaboration and practical action to unlock the region's economic potential, including ensuring businesses can access the people and skills they need to grow.

Building on its first Trailblazer project, the Chamber is also working on a follow-up project commissioned by the North East Mayoral Strategic Authority (NE MSA), focused on employers and young people aged 16 to 24 who are not in education, employment or training (NEET), or at risk of becoming so.

The project will explore how businesses can better attract, recruit and retain young people, while helping young people understand what employers are looking for and how to develop and demonstrate the skills needed to secure employment.