11 June 2024
If you are covering the latest labour market data from the ONS, please see the following comment from Richard Carter, head of fixed interest research at Quilter Cheviot:
“The UK labour market has been in somewhat in a state of flux due to statistical issues in reporting the data. Recently the revised data indicated the UK had a much stronger jobs market than was previously thought, and while today shows some sign of it turning, it remains to be in a fairly robust shape and earnings growth remains strong as we head towards the general election.
“The number of payrolled employees in the UK decreased by 36,000 (0.1%) between March and April 2024, but rose by 201,000 (0.7%) between April 2023 and April 2024. Therefore, this on its own is not going to shift the needle for the Bank of England to start cutting rates. Similarly, the UK unemployment rate (for people aged 16 years and over) was estimated at 4.4% in February to April 2024.
“What the Bank of England crucially wants to see is wage inflation fall more than it has, especially with the headline rate of inflation very much near target. The latest data shows that annual growth in employees' average regular earnings (excluding bonuses) in Great Britain was 6.0% in February to April 2024, and annual growth in total earnings (including bonuses) was 5.9%.
“The BoE will be incredibly cautious to cut rates at a period when spending power is high for consumers and potentially triggering a fresh inflationary bout. As such, today’s data will continue to put a dampener on a rate cut in June or August, with November remaining the likeliest date to see that first fall.
“It will be interesting to see how the labour market progresses given we are likely to see a change in government in little under four weeks’ time. Labour has committed to creating a huge number of ‘green jobs’ as it looks to accelerate the energy transition, but with the data showing things are still finely balanced, whether or not this can be achieved remains to be seen.”
