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Highlights
The second, delayed, part of the August/September report provides a so-called adjusted experimental suite of data reflecting the high level of uncertainty surrounding the accuracy of the latest survey. This will not be welcome by the BoE ahead of next week's MPC meeting.
Claimant count unemployment rose a surprisingly steep 20,400 in September following a revised 9,000 drop in August. This was the largest increase since April and put the jobless rate at 4.0 percent, up from August's 3.9 percent.
The new ILO data put the unemployment rate at 4.2 percent in the three months to August. This was a tick below the market consensus but up from the 4.0 percent recorded in the previous quarter. At the same time, the employment rate fell 0.3 percentage points to 75.7 percent while the economic inactivity rate edged 0.1 percentage point higher to 20.9 percent. As shown in last week's report, job prospects also deteriorated as vacancies fell 43,000 in the third quarter to 988,000, their 15th successive quarterly decrease and the lowest reading since May-July 2021. However, while this was down 256,000 from a year ago, it was also still 187,000 above their level just before the arrival of Covid. Significantly too, the experimental September payroll data showed a third successive monthly decline for the first time since November 2020. A provisional 11,000 was also the steepest of the sequence so far.
The wages element was also released last week and showed headline average earnings growth of 8.1 percent in the three months to August. This was down from 8.5 percent in the three months to July and below the (then) consensus call of 8.3 percent. Regular earnings growth was 7.8 percent, a tick below the rate last time.
Today's update will leave BoE policymakers scratching their heads over what to do about policy. The labour market survey is a key input into the bank's interest rate decision but the MPC will be loathe to place too much weight on today's experimental statistics. Financial markets will be similarly unimpressed. The UK's RPI now stands at minus 6 but the underperformance of the real economy is shown in an RPI-P of minus 25.
Claimant count unemployment rose a surprisingly steep 20,400 in September following a revised 9,000 drop in August. This was the largest increase since April and put the jobless rate at 4.0 percent, up from August's 3.9 percent.
The new ILO data put the unemployment rate at 4.2 percent in the three months to August. This was a tick below the market consensus but up from the 4.0 percent recorded in the previous quarter. At the same time, the employment rate fell 0.3 percentage points to 75.7 percent while the economic inactivity rate edged 0.1 percentage point higher to 20.9 percent. As shown in last week's report, job prospects also deteriorated as vacancies fell 43,000 in the third quarter to 988,000, their 15th successive quarterly decrease and the lowest reading since May-July 2021. However, while this was down 256,000 from a year ago, it was also still 187,000 above their level just before the arrival of Covid. Significantly too, the experimental September payroll data showed a third successive monthly decline for the first time since November 2020. A provisional 11,000 was also the steepest of the sequence so far.
The wages element was also released last week and showed headline average earnings growth of 8.1 percent in the three months to August. This was down from 8.5 percent in the three months to July and below the (then) consensus call of 8.3 percent. Regular earnings growth was 7.8 percent, a tick below the rate last time.
Today's update will leave BoE policymakers scratching their heads over what to do about policy. The labour market survey is a key input into the bank's interest rate decision but the MPC will be loathe to place too much weight on today's experimental statistics. Financial markets will be similarly unimpressed. The UK's RPI now stands at minus 6 but the underperformance of the real economy is shown in an RPI-P of minus 25.
Market Consensus Before Announcement
The ILO jobless rate is expected to hold steady at 4.3 percent in the three months to August.
Note that today's data complete the labour market report released in only partial form last week due to an inadequate initial response to the survey.
Note that today's data complete the labour market report released in only partial form last week due to an inadequate initial response to the survey.
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.
