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UK CommentLabour market numbers leave BoE on track for May hike

  1. Unemployment rate down to 4.2%, beating the consensus
  2. Total pay unchanged at 2.8% (consensus: 3.0%); regular pay up to 2.8% from 2.6% (consensus: 2.8%)
  3. In line with BoE expectations
Unemployment rate down to 4.2%; total and regular pay growth at 2.8%
UK employment grew by 55k in the three months to February, matching the consensus. However, the labour force grew by only 39k over the same period, causing the number of unemployed to fall by 16k and leaving the unemployment rate at 4.2 percent from 4.3 percent. However, the timelier claimant count increased by 11.6k in March, and the February numbers were revised to 15.1k from a previous 9.2k. Based on past form, the change in jobless claims suggests that the unemployment rate could pick up again. That said, survey evidence, such as the PMI composite labour index, suggests that the labour market remained strong through Q1. Average weekly earnings (total pay) in the three months to February increased by 2.8 percent compared with a year earlier. This was a bit lower than the consensus of a pickup to 3.0 percent. Average weekly earnings excluding bonuses (regular pay) increased by 2.8 percent, up from 2.6 percent, which was in line with the consensus.
In line with BoE expectations
The Bank of England's (BoE) expectations are for the unemployment rate to stay unchanged at 4.3 percent in the near term and for regular pay growth to pick up to 2.75 percent during H1 of this year. Today’s labour market numbers should be close enough to the BoE’s expectations and leave it on track for an interest rate hike in May, we believe.




Kari Due-Andresen

Chief Economist Norway

Norway and UK

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