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UK CommentResilient UK labour market, but weakness starting to show

  1. Unemployment rate down, as labour force growth weaker than employment
  2. Wage growth could have reached its peak
  3. With Brexit unresolved, the BoE will likely sit still next week
Unemployment rate down, as labour force growth weaker than employment
The UK labour market remains resilient, but weakness may be starting to show. Numbers today showed that the unemployment rate in the UK had ticked down again to 3.8 percent in the three months to July after having temporarily risen to 3.9 percent in the three months to June. The consensus for July was 3.7 percent. However, the fall in the unemployment rate came as employment growth weakened, but growth in the labour force weakened more. Also, the labour market indicators in the PMI surveys suggest employment growth across UK businesses could be weakening ahead. Total wage growth in the UK increased to 4.0 percent y-o-y in the three months to July from 3.8 percent the month before, but regular pay (excluding bonus payments) fell to 3.8 percent from 3.9 percent the previous month. The Bank of England Agent’s survey indicates that wage growth in the UK could have passed its peak.
With Brexit unresolved, the BoE will likely sit still next week
So far, the UK labour market has remained surprisingly strong, which has likely supported consumer confidence and private consumption. However, the PMI surveys indivate activity growth in the UK has stalled over summer. Ahead, we believe that activity growth in the UK will stay muted by Brexit and weakened global demand, contributing to a weakening of the labour market and an increasing unemployment rate from next year. We believe today’s numbers will have little bearing on the Bank of England (BoE) next week. With Brexit still unresolved, the BoE will most likely just sit on its hands.

 


Source: Macrobond


 
 


 


Disclaimer

Kari Due-Andresen

Chief Economist Norway

Norway and UK

kadu01@handelsbanken.no

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