18 June 2026
If you are covering the latest labour market statistics, please see the following comment from Richard Carter, head of fixed interest research at Quilter Cheviot:
“The labour market is still continuing to lose momentum, with the latest figures showing a further cooling. Payrolled employee numbers fell by 53,000 on the month and 138,000 on the year, while the unemployment rate was 4.9%.
“That weakness needs to be read alongside a rapidly shifting global backdrop. The agreement in principle between the US and Iran to end the conflict and reopen the Strait of Hormuz has already pushed oil prices lower and prompted a rebound in risk appetite, as markets begin to unwind the geopolitical risk premium that has driven inflation higher in recent months.
“For the Bank of England, that potentially changes the direction of travel. Much of the recent inflation shock has been tied directly to disrupted energy supply, and a sustained fall in oil prices would ease some of that pressure, giving policymakers greater scope to consider rate cuts again if domestic conditions continue to soften and particularly with this week’s flat inflation reading.
“However, the transmission of the settling of tensions into the real economy will take time, and the labour market sits firmly at the lagging end of that process. Even with a deal in place, shipping flows through the Strait are unlikely to normalise immediately, and the economic effects of several months of disruption are expected to persist well beyond the reopening.
“With Scotland briefly putting the country on pause with a bank holiday called for footballing reasons, this may be one of the rare data releases where ‘extra time’ applies to the stats as well. The early estimate of payrolled employees for May decreased by 119,000 on the year, and flat on the month.
“Wage data will remain central to the policy debate. Annual regular earnings rose by 3.4%, while total earnings increased by 4.4%, leaving pay growth still above levels consistent with the 2% inflation target. Even if energy-driven inflation begins to ease, the Bank will need to be confident that second-round effects are fading before shifting policy more decisively.
“Ultimately, while today’s figures reinforce the sense of a loosening labour market, they may prove to be describing an economy that is already beginning to move past the worst of the external shock. The challenge for policymakers is that the data will only catch up with that reality gradually, leaving the near-term outlook for interest rates finely balanced.”
