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UK CommentStill robust labour market

  1. Catch-up in both employment and labour force growth
  2. Claims increasing, but surveys indicate labour market is still robust
  3. We believe Brexit-related uncertainty will keep wage growth subdued
Catch-up in both employment and labour force growth
UK employment growth was far stronger than expected in the three months to November. After falling two months in a row, employment increased by 102k. However, the labour force, which had also fallen over the previous two months, jumped by nearly as much as employment, leaving the number of unemployed only slightly down. The unemployment rate was unchanged at 4.3 percent, in line with consensus. The more timely claimant count for December increased by 8.6k, after increasing by 12.2k in November (revised from 5.9k). The progression in the number of claims suggests that the unemployment rate could start to move higher. Survey measures for employment intentions, such as the PMI employment index, have shown some weakening over the past few months, but suggest that hiring is still robust. When it comes to wage growth, total pay growth was unchanged at 2.5 percent, in line with the consensus expectation. Regular pay (excluding bonus payments) increased by 2.4 percent y-o-y after 2.3 percent the previous month, and was slightly higher than the consensus expectation of 2.3 percent.
We believe Brexit-related uncertainty will keep wage growth subdued
The Bank of England has expected wage growth to accelerate ahead and reach an average of 3.0 percent this year. We believe Brexit-related uncertainty will keep wage growth subdued. Our assumption is more in line with that of the Office for Budget Responsibility (OBR), which assumes that wage growth will not increase much from current levels over the next couple of years.


 

 



 


Disclaimer

Kari Due-Andresen

Chief Economist Norway

Norway and UK

kadu01@handelsbanken.no

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