21 January 2025
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:
“Despite the continued strain of many economic headwinds, the UK labour market had been holding relatively steady. However, it appears the cracks are starting to appear.
“The unemployment rate rose to 4.4% in September to November, surpassing estimates from a year ago and increasing on the last quarter. Meanwhile, estimates for payrolled employees in the UK fell by 32,000 between October and November 2024, though they rose by 95,000 year on year. From September to November 2024, payrolled employees decreased by 11,000. Similarly, vacancies dropped by 24,000 on the quarter to 812,000 from October to December 2024, indicating a softening of economic activity.
“In concerning news for the Bank of England, annual growth in regular pay excluding bonuses, and total pay which includes bonuses, defied expectations by spiking to 5.6%.
“The upcoming changes to employer national insurance contributions are also expected to weigh heavily, and these figures suggest businesses may already be taking decisive action when it comes to hiring to lessen the burden. Given the labour market already seems to be feeling the heat, this could translate into slower wage growth and potential job losses. However, as the labour market figures from the ONS are a lagging indicator and there have been questions about the Labour Force Survey’s accuracy, it will take time for the true impact to become apparent. This complicates the Bank of England’s ability to accurately gauge the market.
“This morning's figures follow last week’s GDP print which showed that the UK economy is flatlining, as well as inflation figures which showed a reassuring fall in both headline and core inflation. While these latest numbers show the UK is not quite yet in dire straits, it is not far off. The Bank of England faces an incredibly difficult balancing act as we move further into 2025.”
