| Consensus | Actual | Previous | Revised | |
|---|---|---|---|---|
| Claimant Count - M/M | 25,000 | 17,800 | 20,400 | 9,000 |
| Claimant Count Unemployment Rate | 4.0% | 4.0% | ||
| ILO Unemployment Rate | 4.3% | 4.2% | 4.2% |
Highlights
Having been forced to release the previous report in two steps due to problems with the survey response rate the ONS today was at least able to issue a complete September/October update. However, most of the data remain 'adjusted experimental'. The overall picture continued to suggest a relatively robust labour market and, at least as importantly, still sticky wage growth.
Claimant count unemployment rose a smaller than expected 17,800 on the month in October following a downwardly revised 9,000 increase in September. This was its second rise since July but modest enough to leave the jobless rate unchanged at a historically low 4.0 percent.
The ILO data put the third quarter unemployment rate at 4.2 percent, a tick short of the market consensus and low enough to signal a still generally tight labour market. The employment rate dipped a tick to 75.7 percent while vacancies fell by 58,000 to 957,000 in the three months to October, their weakest reading in more than two years. The monthly payroll figures showed a 33,000 increase in October but this series tends to be revised significantly (September's originally re[ported 11,000 drop was amended to show a 32,500 rise).
Wages were surprisingly firm. At an annual 7.9 percent rate, third quarter average earnings growth was down from a stronger revised 8.2 percent print in the three months to August but fully 0.4 percentage points above expectations. Excluding bonuses, the picture was much the same with the rate dipping 0.2 percentage points from an upwardly revised 7.9 percent to 7.7 percent. Neither outturn is consistent with the BoE meeting its 2 percent inflation objective.
Overall today's update is surprisingly firm and likely to ensure that at least some BoE MPC members will want to raise Bank Rate at the December meeting. Just how much faith the bank has in the labour market data is unclear but unless its own regional agents are telling a different story, interest rate cuts could be off the table for some time. The UK's RPI now stands at 9 and the RPI-P at 2. In general, economic activity is performing much as forecast.
Claimant count unemployment rose a smaller than expected 17,800 on the month in October following a downwardly revised 9,000 increase in September. This was its second rise since July but modest enough to leave the jobless rate unchanged at a historically low 4.0 percent.
The ILO data put the third quarter unemployment rate at 4.2 percent, a tick short of the market consensus and low enough to signal a still generally tight labour market. The employment rate dipped a tick to 75.7 percent while vacancies fell by 58,000 to 957,000 in the three months to October, their weakest reading in more than two years. The monthly payroll figures showed a 33,000 increase in October but this series tends to be revised significantly (September's originally re[ported 11,000 drop was amended to show a 32,500 rise).
Wages were surprisingly firm. At an annual 7.9 percent rate, third quarter average earnings growth was down from a stronger revised 8.2 percent print in the three months to August but fully 0.4 percentage points above expectations. Excluding bonuses, the picture was much the same with the rate dipping 0.2 percentage points from an upwardly revised 7.9 percent to 7.7 percent. Neither outturn is consistent with the BoE meeting its 2 percent inflation objective.
Overall today's update is surprisingly firm and likely to ensure that at least some BoE MPC members will want to raise Bank Rate at the December meeting. Just how much faith the bank has in the labour market data is unclear but unless its own regional agents are telling a different story, interest rate cuts could be off the table for some time. The UK's RPI now stands at 9 and the RPI-P at 2. In general, economic activity is performing much as forecast.
Market Consensus Before Announcement
Average earnings growth for the three months to September are seen easing to 7.5 percent from 8.1 percent, a result that would still be extremely elevated.
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.
