24 October 2023
If you are covering the latest labour market statistics from the ONS, please find below a comment from Marcus Brookes, chief investment officer at Quilter Investors:
“At a time when every data source will be analysed to the nth degree by the Bank of England and investors, it is unfortunate that the ONS had to delay the publication of the employment numbers to today. With low response rates to surveys and a new ‘experimental’ data series being used, today’s figures provide a slightly clouded picture of what is happening in the labour market, at a point where we are a very finely balanced point in the rate hiking cycle.
“Looking at the ‘experimental’ data, we can see that unemployment in the UK is remaining stable, for now. However, the fast rise in interest rates is beginning to bite and we are seeing companies scale back hiring and in some cases shed jobs, with the employment rate falling and unemployment rising gradually in the last three months. We know that economic growth in the UK is slowing and could potentially turn negative for the fourth quarter, so today’s data provides further evidence that things may be beginning to roll over. For the Bank of England this may be just enough to continue with a pause at its next interest rate decision, having hit the brakes at its last meeting.
“One thing for certain, however, is the UK is potentially mired in uncertainty for a period of time – just like today’s employment statistics. With the economy grinding to a halt, an election year-round the corner and geopolitical instability increasing, things could get harder before they get easier, despite inflation continuing to fall. For investors, it’s times like these where you need to hold your nerve and look out for the opportunities that an unsettled market will often provide.”
