12 March 2024
If you are covering the UK labour market statistics, please see the following comment from Lindsay James, investment strategist at Quilter Investors:
"This morning’s Labour market statistics from the ONS should hopefully represent a more accurate data set for the Bank of England to make its forthcoming decisions although the ONS is keen to emphasise caution in quarterly comparisons.
"For months, the Bank has been effectively navigating through the fog of experimental employment figures due to declining numbers of respondents to its ONS’s Labour Force Survey, which left the Bank akin to a pilot flying blind through a storm of economic uncertainty.
"The declining figures have prompted a series of ‘in development’ statistics that have injected a dose of uncertainty into what the true economic narrative is. The latest data however suggests that the unemployment rate has ticked up slightly to 3.9%.
"The fear has been that without the better data at hand the Bank might end up in a situation of accidental over-tightening of monetary policy, after inflicting more pain than necessary on the jobs market.
"However, elsewhere in the data the slowing growth of total earnings, now at an annual rate of 5.6% and marginally lower than forecasts, should help inflation continue its downward trajectory back to the BoE’s 2% target. The Office for Budget Responsibility at the Budget last week, predicted that we’d reach this level of inflation in just a few months. This will help the government with its messaging as it ramps up its election campaign after a Budget that failed to garner too much additional support for an increasingly unpopular Tory party.
"Today’s statistics point to a slightly ailing labour market, but it is still not showing anywhere near the level of slowdown that comes with a typical recession. While growth in employment is slowing, with January payroll figures revised significantly lower and wage growth continuing a slight descent, these figures suggest that the labour market is beginning to see a real impact from the current level of interest rates, providing the Bank of England with further evidence that recent tightening is having its desired effect."
