| Consensus | Actual | Previous | Revised | |
|---|---|---|---|---|
| Claimant Count - M/M | 9,500 | 28,200 | -11,200 | -18.800 |
| Claimant Count Unemployment Rate | 3.9% | 3.8% | ||
| ILO Unemployment Rate | 3.7% | 3.8% | 3.7% | |
| Average Earnings - Y/Y | 5.1% | 5.9% | 5.7% | 5.9% |
Highlights
The February/March report shows a mixed picture of the labour market with rises in both employment and unemployment and, crucially, unexpectedly robust wage growth.
Following a steeper revised 18,800 fall in February, claimant count unemployment rose 28,200 last month. This was well ahead of the market consensus and the first increase since December. As a result, the jobless rate edged a tick higher to 3.9 percent, reversing the dip seen in mid-quarter but still historically very low.
Meanwhile, the ILO data showed unemployment climbing 49,000 to 1.293 million in the three months to February. This was still 71,000 below its pre-Covid level but a large enough gain to lift the rate from 3.7 percent to 3.8 percent, just above the consensus. However, employment climbed a very respectable 169,000 over the same period, its best showing since March-May 2022 and largely driven by strength in part-time employees and self-employed workers. Consequently, the employment rate rose 0.2 percentage points on the quarter to 75.8 percent, also its highest mark since the three months to May last year. Consistent with the buoyancy shown here, the timeliest estimate of payrolled employees for March showed a 31,000 advance to 30.0 million.
That said, the trend in vacancies remains firmly down. At 1.105 million in the first quarter, the latest reading was 47,000 below versus the previous period, extending the unbroken run of falls that began in the three months to July last year. However, they remain some 279,000 above their pre-pandemic peak.
Finally, overall wage growth was flat but well above market expectations. A 5.9 percent headline rate in the three months to February was unchanged from the upwardly revised pace seen in November-January and reflected a jump in the single month rate from 5.9 percent to 7.0 percent, matching its strongest reading since March 2022. A similar story was true of regular earnings which held steady at 6.6 percent with the single month rate up 0.6 percentage points at 6.9 percent.
In sum, while today's update shows a solid gain in employment that should boost total output and some signs of cooling demand for labour, the overall inflationary message will not sit well with the BoE. Another 25 basis point hike in Bank Rate next month is now all the more likely. The report puts the UK's ECDI at 5 and the ECDI-P at minus 2. Both readings are close enough to zero to indicate that economic activity in general is performing much as expected.
Following a steeper revised 18,800 fall in February, claimant count unemployment rose 28,200 last month. This was well ahead of the market consensus and the first increase since December. As a result, the jobless rate edged a tick higher to 3.9 percent, reversing the dip seen in mid-quarter but still historically very low.
Meanwhile, the ILO data showed unemployment climbing 49,000 to 1.293 million in the three months to February. This was still 71,000 below its pre-Covid level but a large enough gain to lift the rate from 3.7 percent to 3.8 percent, just above the consensus. However, employment climbed a very respectable 169,000 over the same period, its best showing since March-May 2022 and largely driven by strength in part-time employees and self-employed workers. Consequently, the employment rate rose 0.2 percentage points on the quarter to 75.8 percent, also its highest mark since the three months to May last year. Consistent with the buoyancy shown here, the timeliest estimate of payrolled employees for March showed a 31,000 advance to 30.0 million.
That said, the trend in vacancies remains firmly down. At 1.105 million in the first quarter, the latest reading was 47,000 below versus the previous period, extending the unbroken run of falls that began in the three months to July last year. However, they remain some 279,000 above their pre-pandemic peak.
Finally, overall wage growth was flat but well above market expectations. A 5.9 percent headline rate in the three months to February was unchanged from the upwardly revised pace seen in November-January and reflected a jump in the single month rate from 5.9 percent to 7.0 percent, matching its strongest reading since March 2022. A similar story was true of regular earnings which held steady at 6.6 percent with the single month rate up 0.6 percentage points at 6.9 percent.
In sum, while today's update shows a solid gain in employment that should boost total output and some signs of cooling demand for labour, the overall inflationary message will not sit well with the BoE. Another 25 basis point hike in Bank Rate next month is now all the more likely. The report puts the UK's ECDI at 5 and the ECDI-P at minus 2. Both readings are close enough to zero to indicate that economic activity in general is performing much as expected.
Market Consensus Before Announcement
The ILO unemployment rate for the three months to February is expected to hold steady at 3.7 percent; average earnings are expected to slow from 5.7 to 5.1 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.
