| Consensus | Actual | Previous | Revised | |
|---|---|---|---|---|
| Claimant Count - M/M | -12,400 | -11,200 | -12,900 | -30,300 |
| Claimant Count Unemployment Rate | 3.8% | 3.9% | 3.8% | |
| ILO Unemployment Rate | 3.8% | 3.7% | 3.7% | |
| Average Earnings - Y/Y | 5.7% | 5.7% | 5.9% | 6.0% |
Highlights
The January/February report shows that the labour market is still very tight but a limited cooling in wage growth should be viewed favourably by the BoE.
Following a significantly steeper 30,300 fall in January, claimant count unemployment declined a further 11,200 in mid-quarter. This was just slightly short of the market consensus but its third straight decrease. The jobless rate was unchanged but at January's downwardly revised 3.8 percent.
Meanwhile, the ILO data showed unemployment climbing just 5,000 to 1.253 million in the three months to January. This was still 111,000 below its pre-Covid level and left the rate at 3.7 percent, also in line with the previous period's print and so still close to its record low. Employment rose a respectable 65,000 over the same period, largely due to increases in part-time working and the number of self-employed. As a result, the employment rate edged a tick higher over the quarter to 75.7 percent, matching its highest outturn since the three months ending May 2020. Moreover, the experimental payrolls survey found another hefty 98,000 monthly increase to 30.0 million in January and, on this measure, employment has still climbed every month since February 2021. That said, the trend in vacancies remains firmly down. At 1.124 million in the three months to February, the latest reading was down 51,000 versus the previous period, extending the unbroken run of falls that began in the three months to July last year. However, they remain well above their pre-pandemic peak.
Finally, overall wage growth decelerated in line with expectations. From an upwardly amended 6.0 percent in the fourth quarter, the 3-monthly annual rate dropped to 5.7 percent, its second successive fall and its lowest reading since the three months to July 2022. Importantly, regular earnings similarly eased from 6.7 percent to 6.5 percent, although this only matched a 4-month trough and remains historically very high outside of the Covid period.
In sum, today's update shows that while the labour market is still very tight, a declining demand for labour would seem to be putting a lid on wage growth. This may not be enough to prevent the BoE raising Bank Rate again next week but in the midst of the fallout from the collapse of SVB and Signature Bank, the MPC's doves might yet have the upper hand. The report leaves both the UK's ECDI (34) and ECDI-P (31) comfortably in positive surprise territory and so indicative of overall economic activity continuing to outperform market expectations by some margin.
Following a significantly steeper 30,300 fall in January, claimant count unemployment declined a further 11,200 in mid-quarter. This was just slightly short of the market consensus but its third straight decrease. The jobless rate was unchanged but at January's downwardly revised 3.8 percent.
Meanwhile, the ILO data showed unemployment climbing just 5,000 to 1.253 million in the three months to January. This was still 111,000 below its pre-Covid level and left the rate at 3.7 percent, also in line with the previous period's print and so still close to its record low. Employment rose a respectable 65,000 over the same period, largely due to increases in part-time working and the number of self-employed. As a result, the employment rate edged a tick higher over the quarter to 75.7 percent, matching its highest outturn since the three months ending May 2020. Moreover, the experimental payrolls survey found another hefty 98,000 monthly increase to 30.0 million in January and, on this measure, employment has still climbed every month since February 2021. That said, the trend in vacancies remains firmly down. At 1.124 million in the three months to February, the latest reading was down 51,000 versus the previous period, extending the unbroken run of falls that began in the three months to July last year. However, they remain well above their pre-pandemic peak.
Finally, overall wage growth decelerated in line with expectations. From an upwardly amended 6.0 percent in the fourth quarter, the 3-monthly annual rate dropped to 5.7 percent, its second successive fall and its lowest reading since the three months to July 2022. Importantly, regular earnings similarly eased from 6.7 percent to 6.5 percent, although this only matched a 4-month trough and remains historically very high outside of the Covid period.
In sum, today's update shows that while the labour market is still very tight, a declining demand for labour would seem to be putting a lid on wage growth. This may not be enough to prevent the BoE raising Bank Rate again next week but in the midst of the fallout from the collapse of SVB and Signature Bank, the MPC's doves might yet have the upper hand. The report leaves both the UK's ECDI (34) and ECDI-P (31) comfortably in positive surprise territory and so indicative of overall economic activity continuing to outperform market expectations by some margin.
Market Consensus Before Announcement
The ILO unemployment rate for the three months to January is expected to edge higher to 3.8 versus 3.7 percent in the fourth quarter. Average earnings are seen at 5.7 percent, down from 5.9 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.
