| Consensus | Actual | Previous | Revised | |
|---|---|---|---|---|
| Claimant Count - M/M | 3,000 | 11,700 | 16,000 | 300 |
| Claimant Count Unemployment Rate | 4.0% | 4.0% | ||
| ILO Unemployment Rate | 4.3% | 4.2% | 4.2% | |
| Average Earnings - Y/Y | 7.1% | 6.5% | 7.2% |
Highlights
The November/December report remains subject to doubts about the accuracy of its data but the overall impression is of a still historically tight labour market that is loosening only gradually. However, for the BoE, the main focus will be wage growth and here another marked fall will come as welcome relief.
Claimant count unemployment rose 11,700 on the month in December, rather more than the market consensus but after a much smaller revised 300 increase in November. The jobless rate was unchanged at 4.0 percent.
The experimental ILO data put the unemployment rate over the three months to November at 4.2 percent, a tick better than expectations and historically still very low. Moreover, calculated on the same basis, employment was up a further 73,000, nudging the rate 0.1 percentage point higher to 75.8 percent and suggesting that the demand for labour remains quite solid. That said, vacancies continued to fall, down 49,000 or 5.0 percent to 934,000 in the fourth quarter. Job offers have been on an unbroken downtrend since May-July 2022. In addition, the provisional payroll estimate for December showed a 24,000 drop versus November, its first fall since last August.
Against this mixed backdrop, wages were again easily on the soft side of the market consensus. At an annual 6.5 percent rate, (headline) growth in the three months to November was down sharply from an unrevised 7.2 percent in the period to October, reflecting a drop in the single month rate from 6.0 percent to 5.0 percent. The headline print was the weakest since the first quarter of 2023. Excluding bonuses, the picture was much the same with the headline rate dropping from 7.2 percent to 6.6 percent and the single month rate from 6.1 percent to 5.9 percent.
In sum, today's update provides something for the BoE MPC's doves and hawks alike. Overall labour market conditions show little slack but that has not stopped a surprisingly rapid deceleration in wage growth. Even so, earnings continue to climb at a pace that must leave a serious question mark hanging over the chances of sustainably attaining the 2 percent inflation target. Bank Rate is very unlikely to be cut next month. The UK's RPI now stands at 26 and the RPI-P at 22, both readings showing economic activity in general running rather hotter than forecast.
Claimant count unemployment rose 11,700 on the month in December, rather more than the market consensus but after a much smaller revised 300 increase in November. The jobless rate was unchanged at 4.0 percent.
The experimental ILO data put the unemployment rate over the three months to November at 4.2 percent, a tick better than expectations and historically still very low. Moreover, calculated on the same basis, employment was up a further 73,000, nudging the rate 0.1 percentage point higher to 75.8 percent and suggesting that the demand for labour remains quite solid. That said, vacancies continued to fall, down 49,000 or 5.0 percent to 934,000 in the fourth quarter. Job offers have been on an unbroken downtrend since May-July 2022. In addition, the provisional payroll estimate for December showed a 24,000 drop versus November, its first fall since last August.
Against this mixed backdrop, wages were again easily on the soft side of the market consensus. At an annual 6.5 percent rate, (headline) growth in the three months to November was down sharply from an unrevised 7.2 percent in the period to October, reflecting a drop in the single month rate from 6.0 percent to 5.0 percent. The headline print was the weakest since the first quarter of 2023. Excluding bonuses, the picture was much the same with the headline rate dropping from 7.2 percent to 6.6 percent and the single month rate from 6.1 percent to 5.9 percent.
In sum, today's update provides something for the BoE MPC's doves and hawks alike. Overall labour market conditions show little slack but that has not stopped a surprisingly rapid deceleration in wage growth. Even so, earnings continue to climb at a pace that must leave a serious question mark hanging over the chances of sustainably attaining the 2 percent inflation target. Bank Rate is very unlikely to be cut next month. The UK's RPI now stands at 26 and the RPI-P at 22, both readings showing economic activity in general running rather hotter than forecast.
Market Consensus Before Announcement
The ILO unemployment rate for the three months to December is expected to rise to 4.3 percent versus 4.2 percent previously. Average earnings growth for the three months to December is seen easing only marginally to 7.1 percent from 7.2 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.
