| Consensus | Actual | Previous | Revised | |
|---|---|---|---|---|
| Claimant Count - M/M | 17,000 | 900 | 29,000 | 7,300 |
| Claimant Count Unemployment Rate | 4.0% | 4.0% | ||
| ILO Unemployment Rate | 4.3% | 4.3% | 4.2% | |
| Average Earnings - Y/Y | 8.2% | 8.5% | 8.2% | 8.4% |
Highlights
The July/August report shows a loosening in overall market conditions but accelerating wage growth will ensure that at least some BoE MPC members will want another interest rate hike next week.
In fact, claimant count unemployment rose only 900 in August, well short of the market call and following a much smaller revised 7,300 gain in July. The increase was small enough to leave the jobless rate steady at 4.0 percent.
However, the ILO data showed unemployment rising a sizeable 159,000 to 1.464 million in the three months to July. This was the steepest jump since the uptrend began in August-October 2022 and large enough to lift the jobless rate to 4.3 percent. This was up from 3.8 percent in the February-April period but in line with the market consensus.
At the same time, employment declined fully 207,000 to 32,882, its sharpest drop since August-October 2020. The fall reduced the employment rate to 75.5 percent, some 0.5 percentage points below the previous quarter and 1.1 percentage points short of its level just before the pandemic. Job prospects also deteriorated as vacancies fell 64,000 in the June-August period, their 14th successive quarterly decrease. That said, they were still 188,000 above their pre-Covid mark. Significantly too, the experimental August payroll data showed a second successive monthly decline for the first time since October/November 2020. A provisional 967 fall was only small but compounded a hefty 3,548 drop in July.
Finally, and again of key importance to the BoE, wage growth continued to beat market expectations. At fully 8.5 percent, the overall headline rate in three months to July was 0.3 percentage points above the market consensus and up from an already stronger revised 8.4 percent in the second quarter. Regular earnings were slightly softer but, at 7.8 percent, still matched the record high posted in the second quarter.
In sum, today's update will leave speculators still guessing about next week's BoE vote. The pick-up in wage growth should all but guarantee that Catherine Mann, and probably Jonathan Haskel, will both want to tighten again. However, others are likely to focus more on the slowdown in the economy. Consequently, for now, it remains a very close call. Today's report puts the UK's RPI at 6 and the RPI-P at 29, indicating that real economic activity is running somewhat ahead of market expectations.
In fact, claimant count unemployment rose only 900 in August, well short of the market call and following a much smaller revised 7,300 gain in July. The increase was small enough to leave the jobless rate steady at 4.0 percent.
However, the ILO data showed unemployment rising a sizeable 159,000 to 1.464 million in the three months to July. This was the steepest jump since the uptrend began in August-October 2022 and large enough to lift the jobless rate to 4.3 percent. This was up from 3.8 percent in the February-April period but in line with the market consensus.
At the same time, employment declined fully 207,000 to 32,882, its sharpest drop since August-October 2020. The fall reduced the employment rate to 75.5 percent, some 0.5 percentage points below the previous quarter and 1.1 percentage points short of its level just before the pandemic. Job prospects also deteriorated as vacancies fell 64,000 in the June-August period, their 14th successive quarterly decrease. That said, they were still 188,000 above their pre-Covid mark. Significantly too, the experimental August payroll data showed a second successive monthly decline for the first time since October/November 2020. A provisional 967 fall was only small but compounded a hefty 3,548 drop in July.
Finally, and again of key importance to the BoE, wage growth continued to beat market expectations. At fully 8.5 percent, the overall headline rate in three months to July was 0.3 percentage points above the market consensus and up from an already stronger revised 8.4 percent in the second quarter. Regular earnings were slightly softer but, at 7.8 percent, still matched the record high posted in the second quarter.
In sum, today's update will leave speculators still guessing about next week's BoE vote. The pick-up in wage growth should all but guarantee that Catherine Mann, and probably Jonathan Haskel, will both want to tighten again. However, others are likely to focus more on the slowdown in the economy. Consequently, for now, it remains a very close call. Today's report puts the UK's RPI at 6 and the RPI-P at 29, indicating that real economic activity is running somewhat ahead of market expectations.
Market Consensus Before Announcement
The ILO unemployment rate for the three months to July is expected to edge up a tick to 4.3 percent while headline average earnings growth for the three months to July holds steady at 8.2 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.
