16 January 2024
If you are covering the latest UK labour market statistics, please see the following comment from Richard Carter, head of fixed interest research at Quilter Cheviot:
“Today's ONS jobs data for December offers a fresh lens on the UK's labour market which highlights the realities of the difficulties the Bank of England faces in its interest rate decisions. These figures are critical in guiding the Bank’s policy decisions as they reveal the underlying currents of a resilient yet challenged labour force under the strain of higher interest rates. The reality is that the external market is looking for signs that the labour market is loosening as it will show that monetary policy is working and inflation will continue to fall and stabilise. However, keep rates too high for too long and the Bank might overshoot its aim and cause more pain than necessary in the labour market.
"So far though, in October to December 2023, the estimated number of vacancies in the UK fell by 49,000 on the quarter to 934,000.
"The estimate of payrolled employees in the UK for December 2023 decreased by 24,000 on the revised November 2023 figure to 30.2 million. This may be as a result of a change in the method of data collection but while there is now certainly more optimism in the air in respect to the UK’s economic future, businesses are still being battered by the cost of living storm. This rate may well jump up if the Bank does indeed keep rates higher for longer.
"Annual growth in regular earnings (excluding bonuses) in Great Britain was 6.6% in September to November 2023, and annual growth in employees' average total earnings (including bonuses) was 6.5% in September to November 2023. This will be carefully watched to check for signs of how much of an impact the Bank’s interest rate decisions have slowed down rampant growth in pay contributing to inflation.
"The revised estimates for September to November 2023 show that UK economic inactivity rate (for those aged 16 to 64 years) decreased by 0.1 percentage points on the quarter to 20.8%. This remains a key piece in the puzzle of the UK’s economic health. It speaks to the ongoing challenge of engaging the full potential of the labour force something the Conservatives have been vocal about improving.
"As political tides ebb and flow, with an election on the horizon, all these figures start to become important ammunition for either side to make their case for being in government next year or sooner."
