| Consensus | Actual | Previous | Revised | |
|---|---|---|---|---|
| Claimant Count - M/M | 20,3000 | 16,000 | 17,800 | 8,900 |
| Claimant Count Unemployment Rate | 4.0% | 4.0% | 3.9% | |
| ILO Unemployment Rate | 4.2% | 4.2% | 4.2% | |
| Average Earnings - Y/Y | 7.7% | 7.2% | 7.9% | 8.0% |
Highlights
The latest report shows a still tight, but also loosening, labour market and, importantly for the BoE, a surprisingly sharp deceleration in wage growth. However, with much of the data still termed"experimental" underlying conditions remain unclear.
Claimant count unemployment rose 16,000 on the month in November, a smaller than expected increase and that after a downwardly revised 8,900 gain in October. Even so, this was its fifth rise in the last six months and sharp enough to lift the jobless rate from October's downwardly amended 3.9 percent to 4.0 percent, still historically very low.
The experimental ILO data put unemployment rate over the three months to October at 4.2 percent, in line with the market consensus and similarly still low enough to signal a generally tight labour market. Calculated on the same basis, the employment rate is unchanged at 75.7 percent, down 0.8 percentage points on the year. Meantime, the monthly payroll figures showed a 13,000 drop to 30.2 million in November but this figure is likely to be revised. Vacancies continued to decline, falling 45,000 on the quarter in the September to November period. This was their 17th consecutive decrease, the longest consecutive run of quarterly falls ever recorded but, at 949,000, they were still above their pre-Covid-19 levels.
Wages remained robust but were easily on the soft side of the market consensus. At an annual 7.2 percent rate, growth in the three months to October was down sharply from a slightly a stronger revised 8.0 percent print in the third quarter. The single month outturn (6.0 percent) fell fully 2.5 percentage points. Excluding bonuses, the picture is much the same with the headline rate dropping from 7.8 percent to 7.3 percent and the single month rate from 7.5 percent to 6.4 percent. Nonetheless, for now, rises in both overall and regular pay are still too high to suggest that the 2 percent CPI target is within reach.
In sum, today's update is probably firm enough to ensure that at least some BoE MPC members again push for a higher Bank Rate at this week's MPC meeting. However, the marked deceleration in earnings growth will be very welcome by all and should significantly increase the chances that official interest rates have actually peaked. The UK's RPI now stands at 20 and the RPI-P at 15, both readings showing economic activity in general modestly outperforming forecasts.
Claimant count unemployment rose 16,000 on the month in November, a smaller than expected increase and that after a downwardly revised 8,900 gain in October. Even so, this was its fifth rise in the last six months and sharp enough to lift the jobless rate from October's downwardly amended 3.9 percent to 4.0 percent, still historically very low.
The experimental ILO data put unemployment rate over the three months to October at 4.2 percent, in line with the market consensus and similarly still low enough to signal a generally tight labour market. Calculated on the same basis, the employment rate is unchanged at 75.7 percent, down 0.8 percentage points on the year. Meantime, the monthly payroll figures showed a 13,000 drop to 30.2 million in November but this figure is likely to be revised. Vacancies continued to decline, falling 45,000 on the quarter in the September to November period. This was their 17th consecutive decrease, the longest consecutive run of quarterly falls ever recorded but, at 949,000, they were still above their pre-Covid-19 levels.
Wages remained robust but were easily on the soft side of the market consensus. At an annual 7.2 percent rate, growth in the three months to October was down sharply from a slightly a stronger revised 8.0 percent print in the third quarter. The single month outturn (6.0 percent) fell fully 2.5 percentage points. Excluding bonuses, the picture is much the same with the headline rate dropping from 7.8 percent to 7.3 percent and the single month rate from 7.5 percent to 6.4 percent. Nonetheless, for now, rises in both overall and regular pay are still too high to suggest that the 2 percent CPI target is within reach.
In sum, today's update is probably firm enough to ensure that at least some BoE MPC members again push for a higher Bank Rate at this week's MPC meeting. However, the marked deceleration in earnings growth will be very welcome by all and should significantly increase the chances that official interest rates have actually peaked. The UK's RPI now stands at 20 and the RPI-P at 15, both readings showing economic activity in general modestly outperforming forecasts.
Market Consensus Before Announcement
The jobless data continue to be of questionable reliability. The ILO rate is seen steady at 4.2 percent while the claimant count is expected to rise 20,300. Average earnings growth for the three months to October is seen easing but only slightly to 7.7 percent from 7.9 percent and 8.2 percent in the two prior reports.
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.
