13 February 2024
If you are covering the latest labour market data from the ONS, please see the following comment from Lindsay James, investment strategist at Quilter Investors:
"Today's release of February’s ONS jobs data unveils the complicated dynamics of the UK's labour market. This new data finally gives the Bank of England (BoE) a better and hopefully more accurate picture of how its policies are actually impacting the workforce. The Labour Force Survey (LFS) data has now been integrated into the data set again providing a fresh perspective on the employment landscape after months of relying on “experimental data” from the ONS.
"The unemployment rate from October to December was 3.8%, a drop of 0.2% on the previous three-month period, while the number of payrolled employees crept up by 0.1% between November and December 2023, but with a jump of 1.3% between December 2022 and December 2023. These figures represent an apparent strengthening of the labour market in recent months and represent the pulse of a labour market under the microscope, especially given the recent shift back to traditional data collection methods. This does however indicate a slightly tighter market than originally thought.
"That said, wage growth does continue to tell the story the central bank wants and annual growth in regular earnings (excluding bonuses) decreased to 6.2% in October to December 2023 from 6.6% in the prior three month period. Importantly, annualising the pattern over the past three months indicates that this is now falling quite quickly, with the annualised nominal growth rate of regular earnings running at just 2.2% - very close to the Bank of England’s target, providing them with some reassurance that this inflationary pulse is weakening.
"Today's data underscores the complexities the BoE faces amidst an evolving economic landscape. The external market is on the lookout for signs that the BoE's monetary policies are making headway against inflation, and we have those signs in this release. Yet, one swallow does not make a summer and the risk remains that maintaining elevated interest rates could inadvertently apply undue strain on the economy and on the labour market, exacerbating economic challenges rather than alleviating them. Muddied data over the last few months does not help things either but hopefully we are now turning a corner with the data more reliable."
