19 May 2026
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:
“The labour market had already had a disappointing start to the year, and ONS figures out this morning reveal the early impact of the Middle East war has continued that trend. Payrolled employee numbers dropped by a further 104,000 between March 2025 and March 2026 and by 28,000 on the month. Meanwhile, the unemployment rate rose slightly to 5.0%, up from 4.9% the previous month.
“The labour market statistics are a lagging indicator and as ever should be treated with a degree of caution. Nonetheless, they remain an important signal for policymakers, and the Bank of England will be paying particularly close attention to wage data given concerns around rising inflation.
“Annual wage growth remained above inflation at 3.4% for regular earnings excluding bonuses and 4.1% for total earnings including bonuses in January to March, slightly than the previous reading. While regular earnings came in slightly cooler than last month, total earnings increased by 0.3%, so the Bank will be alert to the pace of growth in the coming months.
“Today’s figures only capture the initial effects of the conflict, and the full impact will become more apparent in the coming months as higher costs and the potential for weaker consumer demand begin to filter through. Early indications for April show a substantial 210,000 fall in employee numbers on the year and a 100,000 drop on the month, and the outlook suggests a similar pattern could continue for some time.
“Last week’s GDP data came in better than feared, offering some reassurance on the resilience of the economy. However, with inflation data due tomorrow, we will get a more complete picture of the pressures facing both households and businesses. The Bank of England held rates at its latest meeting, but with several weeks until the monetary policy committee reconvenes, much could change. Markets are grappling with an increasingly uncertain outlook, including the risk that persistent inflation pressures could force central banks to tighten policy once more.”
