| Consensus | Actual | Previous | Revised | |
|---|---|---|---|---|
| Claimant Count - M/M | 13,000 | 14,100 | 11,700 | 5,500 |
| Claimant Count Unemployment Rate | 4.0% | 4.0% | ||
| ILO Unemployment Rate | 4.0% | 3.8% | 4.2% | |
| Average Earnings - Y/Y | 5.8% | 5.8% | 6.5% | 6.7% |
Highlights
Having been providing only experimental estimates since last October due to issues with data accuracy, the ONS today issued a new version of its survey based on updated estimates of the size and composition of the UK population. These will now become the official labour market statistics.
Claimant count unemployment rose 14,100 on the month in January, marginally rather more than the market consensus but after a much smaller revised 5,500 increase in December. The jobless rate was unchanged at 4.0 percent.
By contrast, the new ILO data show unemployment falling 87,000 to 1.32 million in the fourth quarter, leaving the number of people out of work at its lowest level since the three months ending January 2023. Moreover, the drop was steep enough to reduce the jobless rate to just 3.8 percent, a couple of ticks short of the market consensus and matching its lowest mark since June-August 2022. At the same time, employment continued to rise, this time by 72,000 to 33.174 million. This saw the rate at 75.0 percent, a tidy 0.2 percentage points above the third quarter print. In addition, while payroll growth is slowing, the provisional January estimate revealed a solid 31,000 increase versus December. That said, vacancies fell again, a 26,000 decline in the three months to January extending the downtrend that began back in May-July 2022.
Meantime, wage growth matched market expectations. At an annual 5.8 percent rate, annual growth in the fourth quarter was down sharply from an upwardly revised 6.7 percent in the three months to November and the weakest since the three months to July 2022. That said, the single month rate was only steady at 5.6 percent. Excluding bonuses, the picture was much the same with the headline rate dropping from 6.7 percent to 6.2 percent and the single month rate flat at also 6.2 percent.
In sum, the new report shows the labour market significantly tighter than originally thought but, it seems, not tight enough to prevent a further deceleration in trend wage growth. It remains to be seen just how trustworthy the latest figures will prove but, as they stand, they will probably leave the BoE's MPC scratching its head over what to do with interest rates. The UK's RPI now stands at 10 and the RPI-P at minus 6, meaning that very modest overall economic outperformance is wholly due to surprisingly firm prices.
Claimant count unemployment rose 14,100 on the month in January, marginally rather more than the market consensus but after a much smaller revised 5,500 increase in December. The jobless rate was unchanged at 4.0 percent.
By contrast, the new ILO data show unemployment falling 87,000 to 1.32 million in the fourth quarter, leaving the number of people out of work at its lowest level since the three months ending January 2023. Moreover, the drop was steep enough to reduce the jobless rate to just 3.8 percent, a couple of ticks short of the market consensus and matching its lowest mark since June-August 2022. At the same time, employment continued to rise, this time by 72,000 to 33.174 million. This saw the rate at 75.0 percent, a tidy 0.2 percentage points above the third quarter print. In addition, while payroll growth is slowing, the provisional January estimate revealed a solid 31,000 increase versus December. That said, vacancies fell again, a 26,000 decline in the three months to January extending the downtrend that began back in May-July 2022.
Meantime, wage growth matched market expectations. At an annual 5.8 percent rate, annual growth in the fourth quarter was down sharply from an upwardly revised 6.7 percent in the three months to November and the weakest since the three months to July 2022. That said, the single month rate was only steady at 5.6 percent. Excluding bonuses, the picture was much the same with the headline rate dropping from 6.7 percent to 6.2 percent and the single month rate flat at also 6.2 percent.
In sum, the new report shows the labour market significantly tighter than originally thought but, it seems, not tight enough to prevent a further deceleration in trend wage growth. It remains to be seen just how trustworthy the latest figures will prove but, as they stand, they will probably leave the BoE's MPC scratching its head over what to do with interest rates. The UK's RPI now stands at 10 and the RPI-P at minus 6, meaning that very modest overall economic outperformance is wholly due to surprisingly firm prices.
Market Consensus Before Announcement
Using a new, hopefully improved, survey the ILO unemployment rate for the fourth quarter is expected to weigh in at 4.0 percent. This would be down from the 4.2 percent originally reported for the three months to November using the old survey but up from 3.9 percent on the basis of the new version. Average earnings growth for the fourth quarter is seen sliding to 5.8 percent from 6.5 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.
