| Consensus | Actual | Previous | Revised | |
|---|---|---|---|---|
| Claimant Count - M/M | 20,300 | 16,800 | 14,100 | 3,100 |
| Claimant Count Unemployment Rate | 4.0% | 4.0% | ||
| ILO Unemployment Rate | 3.8% | 3.9% | 3.8% | |
| Average Earnings - Y/Y | 5.7% | 5.6% | 5.8% |
Highlights
The January/February report found a small decline in ILO unemployment and a modest deceleration in wage growth. With employment little changed, neither development argues in favour of an early cut in Bank Rate by the BoE next week.
Claimant count unemployment rose 16,800 on the month in February following a much smaller revised 3,100 increase at the start of the year. The mid-quarter advance was less than the market consensus and, while leaving intact a solid uptrend in joblessness, kept the unemployment rate unchanged at 4.0 percent.
Meantime, the new ILO data showed the number of people out of work dipping 8,000 to 1.359 million in the three months to January. This extended the unbroken sequence of declines that began back in the third quarter of last year. The fall was accompanied by an uptick in the jobless rate but, at 3.9 percent, it remains only just above its all-time low. Employment dropped 21,00 over the same period, its first decrease since July-September 2023 but only denting the solid gains seen in recent months. Indeed, the employment rate was unchanged at 75.0 percent, well above its long-run average. More up to date, the payroll data showed a 20,000 gain on the month in February but vacancies fell again and a 42,000 slide in the three months to February put their level at the lowest since the second quarter of 2021.
Crucially for the BoE, wage growth continued to slow. At a 5.6 percent rate, the annual change in the three months to January was down from the fourth quarter's 5.8 percent and a tick below the market consensus. It was also the weakest since the period to July 2022. Excluding bonuses, the rate dipped from 6.2 percent to 6.1 percent, matching its softest print since the third quarter of 2022.
In sum, the new report shows some loosening in overall labour market conditions and a further easing in wage pressures. Even so, the market remains very tight and earnings are far too high to accommodate the 2 percent inflation target without a marked improvement in productivity. For most BoE MPC members it is probably a case of a step in the right direction, but still some way to go before interest rates can be cut. Both the UK's RPI and RPI-P now stand at 11, showing overall economic activity just mildly outperforming market expectations.
Claimant count unemployment rose 16,800 on the month in February following a much smaller revised 3,100 increase at the start of the year. The mid-quarter advance was less than the market consensus and, while leaving intact a solid uptrend in joblessness, kept the unemployment rate unchanged at 4.0 percent.
Meantime, the new ILO data showed the number of people out of work dipping 8,000 to 1.359 million in the three months to January. This extended the unbroken sequence of declines that began back in the third quarter of last year. The fall was accompanied by an uptick in the jobless rate but, at 3.9 percent, it remains only just above its all-time low. Employment dropped 21,00 over the same period, its first decrease since July-September 2023 but only denting the solid gains seen in recent months. Indeed, the employment rate was unchanged at 75.0 percent, well above its long-run average. More up to date, the payroll data showed a 20,000 gain on the month in February but vacancies fell again and a 42,000 slide in the three months to February put their level at the lowest since the second quarter of 2021.
Crucially for the BoE, wage growth continued to slow. At a 5.6 percent rate, the annual change in the three months to January was down from the fourth quarter's 5.8 percent and a tick below the market consensus. It was also the weakest since the period to July 2022. Excluding bonuses, the rate dipped from 6.2 percent to 6.1 percent, matching its softest print since the third quarter of 2022.
In sum, the new report shows some loosening in overall labour market conditions and a further easing in wage pressures. Even so, the market remains very tight and earnings are far too high to accommodate the 2 percent inflation target without a marked improvement in productivity. For most BoE MPC members it is probably a case of a step in the right direction, but still some way to go before interest rates can be cut. Both the UK's RPI and RPI-P now stand at 11, showing overall economic activity just mildly outperforming market expectations.
Market Consensus Before Announcement
The ILO unemployment rate for the three months to January is expected to hold at 3.8 percent which in January's report was 2 tenths tighter than expected. Average earnings growth over the same period is seen edging lower to a still overheated 5.7 percent from 5.8 percent and 6.7 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.
