20 March 2025
If you are covering the latest UK labour market statistics, please see the following comment from Lindsay James, investment strategist at Quilter:
“Despite businesses facing a combination of weakening consumer confidence and looming cost pressures which are set to come into play in April, the UK labour market has continued to plod along with a relatively steady set of numbers.
“The unemployment rate held at 4.4% in the three months to January, but this is up when compared to the previous year and the latest quarter. Between December 2024 to January 2025, payrolled employee numbers rose by 9,000. On a quarterly basis there was a fall of 9,000, though the number was still up by 44,000 between January 2024 and January 2025.
“The UK jobs market has held up surprisingly well so far despite the substantial economic pressures, and job vacancies were broadly unchanged on the quarter, coming in at 816,000 in December 2024 to February 2025. Demand for workers has by no means collapsed, and vacancies remain above pre-pandemic levels, but it is worth noting that there has been a consistent decline and we could see this pick up as businesses contend with higher costs.
“The Bank of England will have a rather treacherous path to navigate in the coming months. At midday today, the Bank will announce its latest monetary policy decision and is widely expected to hold rates at 4.5%. With inflation seeing a surprise jump to 3% in January, the Bank is likely to hold fire on any further cuts for now until it is confident inflation is heading back in the right direction. Today’s wage growth figures will also have done little to quell its fears. Regular pay, excluding bonuses, rose by 5.9% between November 2024 and January 2025, while total pay, including bonuses, was up by 5.8% in the same period – still far above inflation.
“In a blow to Rachel Reeves, who will deliver her Spring Statement in less than a week, the UK economy contracted by 0.1% in January. While this is tempered by the 0.4% uptick seen in December, it is indicative of an economy that is well and truly flatlining and in desperate need of some form of stimulus. However, January’s higher than expected inflation figure, as well as the Bank’s expectation that it could continue to grow to 3.7% later in the year, means it will be reluctant to cut rates too much too quickly.
“The Bank of England will have been watching the latest data prints closely, but it seems increasingly likely that it will pause for thought for now.”
