| Consensus | Actual | Previous | Revised | |
|---|---|---|---|---|
| Claimant Count - M/M | 16,000 | 19,700 | 30,500 | 16,100 |
| Claimant Count Unemployment Rate | 4.0% | 3.9% | ||
| ILO Unemployment Rate | 3.7% | 3.7% | 3.7% | |
| Average Earnings - Y/Y | 6.1% | 6.4% | 6.1% | 6.2% |
Highlights
The November/December report is generally quite firm with wage pressures notably strong.
Following a significantly smaller revised 16,100 increase in November, claimant count unemployment rose a further, and slightly larger than expected, 19,700 at year-end. This was its fourth increase in the last five months and lifted the number of people out of work to 1.562 million, a 7-month high. It also nudged the jobless rate a tick firmer to 4.0 percent, its first rise since February 2021 but still historically very low.
Meanwhile, the ILO data also showed unemployment climbing in the three months to November. However, a 56,000 advance to 1.244 million was small enough to leave the rate unchanged at just 3.7 percent, only a couple of ticks above the June-August low and in line with the market consensus. Indeed, employment rose 27,000 over the same period although this left the rate flat at 75.6 percent and so still 1.0 percentage points lower than before the arrival of Covid.
The more timely experimental payrolls survey found a 28,000 increase to 29.99 million and on this measure, employment has climbed every month since February 2021. That said, the trend vacancies remains firmly down. At 1.161 million in the fourth quarter, they were 75,000 below the previous period, extending the unbroken run of falls that began in the three months to July. However, they remain well above their 863,000 pre-pandemic peak.
Finally, overall wage growth accelerated again. The headline annual rate for the three months to November was 6.4 percent, some 0.3 percentage points higher than expected and matching the strongest reading since the three months to April. Regular earnings followed suit, also picking up from 6.1 percent to 6.4 percent, a new record outside of the coronavirus pandemic period.
In sum, today's update shows that while the labour market may be loosening a little, it remains very tight and crucially, tight enough to support an inflationary rate of wage growth. Another round of BoE tightening next month looks all the more likely. More generally, the UK's ECDI (minus 1) and ECDI-P (7) continue to indicate that overall economic activity is performing much as expected.
Following a significantly smaller revised 16,100 increase in November, claimant count unemployment rose a further, and slightly larger than expected, 19,700 at year-end. This was its fourth increase in the last five months and lifted the number of people out of work to 1.562 million, a 7-month high. It also nudged the jobless rate a tick firmer to 4.0 percent, its first rise since February 2021 but still historically very low.
Meanwhile, the ILO data also showed unemployment climbing in the three months to November. However, a 56,000 advance to 1.244 million was small enough to leave the rate unchanged at just 3.7 percent, only a couple of ticks above the June-August low and in line with the market consensus. Indeed, employment rose 27,000 over the same period although this left the rate flat at 75.6 percent and so still 1.0 percentage points lower than before the arrival of Covid.
The more timely experimental payrolls survey found a 28,000 increase to 29.99 million and on this measure, employment has climbed every month since February 2021. That said, the trend vacancies remains firmly down. At 1.161 million in the fourth quarter, they were 75,000 below the previous period, extending the unbroken run of falls that began in the three months to July. However, they remain well above their 863,000 pre-pandemic peak.
Finally, overall wage growth accelerated again. The headline annual rate for the three months to November was 6.4 percent, some 0.3 percentage points higher than expected and matching the strongest reading since the three months to April. Regular earnings followed suit, also picking up from 6.1 percent to 6.4 percent, a new record outside of the coronavirus pandemic period.
In sum, today's update shows that while the labour market may be loosening a little, it remains very tight and crucially, tight enough to support an inflationary rate of wage growth. Another round of BoE tightening next month looks all the more likely. More generally, the UK's ECDI (minus 1) and ECDI-P (7) continue to indicate that overall economic activity is performing much as expected.
Market Consensus Before Announcement
The ILO unemployment rate for the three months to November is expected to hold steady at 3.7 percent. Average earnings growth for the three months to November is also expected to hold steady, at 6.1 percent.
Definition
The Labour Market Report covers a number of key areas of the jobs market. Unemployment is updated on the basis of two separate surveys: the claimant count, which measures the number of people claiming unemployment-related benefits, and the more reliable but lagging International Labour Organization's (ILO) measure that excludes jobseekers that did any work during the month and covers those people who are both looking and are available for work. Average earnings growth, a key determinant of inflation, is also updated.
Description
The labour market survey gives the most comprehensive report on how many people are looking for jobs, how many have them and what they are getting paid and how many hours they are working. These numbers are the best way to gauge the current state as well as the future direction of the economy.
The survey also provides information on wage trends, and wage inflation is high on the Bank of England's list of enemies. Bank officials constantly monitor this data watching for even the smallest signs of potential inflationary pressures, even when economic conditions are soggy. If inflation is under control, it is easier for the Bank to maintain a more accommodative monetary policy. If inflation is a problem, the Bank is limited in providing economic stimulus - it must stay within range of its mandated inflation target.
By tracking the jobs data, investors can sense the degree of tightness in the job market. If wage inflation threatens, it is a reasonable bet that interest rates will have to rise and bond and stock prices will fall. In contrast, when jobs growth is slow or negative, then interest rates are more likely to decline - boosting bond and stock prices in the process.
The survey also provides information on wage trends, and wage inflation is high on the Bank of England's list of enemies. Bank officials constantly monitor this data watching for even the smallest signs of potential inflationary pressures, even when economic conditions are soggy. If inflation is under control, it is easier for the Bank to maintain a more accommodative monetary policy. If inflation is a problem, the Bank is limited in providing economic stimulus - it must stay within range of its mandated inflation target.
By tracking the jobs data, investors can sense the degree of tightness in the job market. If wage inflation threatens, it is a reasonable bet that interest rates will have to rise and bond and stock prices will fall. In contrast, when jobs growth is slow or negative, then interest rates are more likely to decline - boosting bond and stock prices in the process.
