17 December 2024
If you are covering the latest UK Labour market statistics, please see the following comment from Lindsay James, investment strategist at Quilter Investors:
“This morning’s ONS data reinforces the picture of a UK labour market holding steady, with little change in the unemployment rate and wage growth figures compared to last month. The unemployment rate of 4.3%, alongside a reasonable uptick in annual growth in regular pay to 5.2%, reflects a labour market that is not yet budging under the strain of the economic headwinds it’s facing.
“Recent data from recruitment firms, such as Reed, still points to weakening demand for labour, with job vacancies continuing their downward trend. Vacancies have dropped by 13% between October and November and are 26% lower than a year ago. While this is a concerning sign of softening economic activity, it has yet to translate into significant increases in unemployment, suggesting that the labour market’s adjustment is happening gradually rather than in a sharp downturn.
“The Bank of England will be carefully analysing this data ahead of its rate decision later this week. With inflation currently at 2.3%, and still above the Bank’s 2% target, policymakers face the same dilemma: balancing the need to maintain price stability with the risk of leaving monetary policy too tight. Rates remain at 4.75%, with persistent wage inflation remaining above historical norms, which is likely to keep the Bank on alert.
“Labour market cooling is evident but remains incremental, with payrolled employee numbers showing little change in 2024 and wage growth still rising. However, businesses are likely to feel the pinch from the recent national insurance rise, which could keep a lid on hiring and wage increases as they navigate higher employment costs.”
