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UK CommentLabour market numbers broadly as expected

  1. Unemployment rate unchanged at 4.2 percent; regular pay growth down to 2.8 percent; total pay growth stays flat
  2. Year-on-year wage growth appears to have peaked and should decelerate further as base effect dissipates
  3. So far, numbers are fairly in line with the Bank of England's estimates
Unemployment rate unchanged at 4.2 percent; regular pay growth down to 2.8 percent; total pay growth stays flat
UK labour market figures were broadly in line with market expectations. The unemployment rate in the three-month period to April was unchanged at 4.2 percent, in line with the consensus expectation, although the Bank of England (BoE) had expected a decline to 4.1 percent in April. Total pay growth (average weekly earnings) stayed flat at 2.5 percent, in line with market expectations. On the other hand, regular pay growth (average weekly earnings excluding bonus payments) inched down to 2.8 percent from 2.9 percent the month before. The BoE in its May inflation report expected regular wage growth to average around 2.75 percent in Q2-Q4 2018. Due to the very weak wage growth at the start of last year, a considerable base effect has buoyed wage growth so far this year. However, both total and regular pay growth appear to have peaked now, and we would expect y-o-y wage growth to ease further in the coming months, as the base effect drops out of the numbers.
So far, numbers are fairly in line with the Bank of England's estimates
Both the unemployment numbers and wage growth numbers are well enough in line with the expectations of the BoE. However, even though the BoE had expected the unemployment rate to fall slightly further, the PMI employment index as well as the claimant count numbers suggest a more sideways movement in unemployment over the coming months.


 


 


 


Disclaimer

Kari Due-Andresen

Chief Economist Norway

Norway and UK

kadu01@handelsbanken.no

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