| Consensus | Actual | Previous | Revised | |
|---|---|---|---|---|
| Claimant Count - M/M | 17,200 | 10,900 | 16,800 | 4,100 |
| Claimant Count Unemployment Rate | 4.0% | 4.0% | ||
| ILO Unemployment Rate | 4.0% | 4.2% | 3.9% | 4.0% |
| Average Earnings - Y/Y | 5.5% | 5.6% | 5.6% |
Highlights
The February/March report shows the labour market in general taking another step in the right direction for a central bank focussed on getting inflation back on target.
Claimant count unemployment rose 10,900 on the month in March, somewhat less than expected and following a much smaller revised 4,100 increase in mid-quarter. The unemployment rate again held steady at a historically low 4.0 percent.
Meantime, the updated ILO data showed the number of people out of work climbing 85,000 in the three months to February. This was the largest increase since May-July 2023 and steep enough to lift the jobless rate from an upwardly revised 4.0 percent to 4.2 percent, a couple of ticks above expectations and also its highest print since the three months ending July last year. Employment painted a similar picture, dropping a further 156,000 over the same period for its worst performance since June-August 2023 and reducing the employment rate to 74.5 percent, the lowest outturn since March-May 2021. More up to date, the payroll data also showed a 67,000 decrease on the month in March, the sharpest fall since November 2020, while vacancies extended their downtrend with a 13,000 decrease to 916,000.
However, wage developments were more mixed. At a 5.6 percent rate, annual growth in the three months to February was only unchanged, the first time it has not fallen since the three months to July last year and a little firmer than forecast. By contrast, on the same basis, regular earnings dipped a tick to 6.0 percent, their softest reading since the third quarter of 2022. That said, both measures are still uncomfortably high.
In sum, the new report shows some further loosening in overall labour market conditions and a further very limited easing in wage pressures. Still, in line with last month's results, the market remains very tight and earnings too high to accommodate the two percent inflation target without a marked improvement in productivity. Tomorrow's CPI update might change things but for now, most BoE MPC members will resist any cut in Bank Rate until there is more concrete evidence that inflationary pressures are under control. The UK's RPI and RPI-P now stand at minus 2 and 6 respectively, essentially showing that overall economic activity is performing much as expected.
Claimant count unemployment rose 10,900 on the month in March, somewhat less than expected and following a much smaller revised 4,100 increase in mid-quarter. The unemployment rate again held steady at a historically low 4.0 percent.
Meantime, the updated ILO data showed the number of people out of work climbing 85,000 in the three months to February. This was the largest increase since May-July 2023 and steep enough to lift the jobless rate from an upwardly revised 4.0 percent to 4.2 percent, a couple of ticks above expectations and also its highest print since the three months ending July last year. Employment painted a similar picture, dropping a further 156,000 over the same period for its worst performance since June-August 2023 and reducing the employment rate to 74.5 percent, the lowest outturn since March-May 2021. More up to date, the payroll data also showed a 67,000 decrease on the month in March, the sharpest fall since November 2020, while vacancies extended their downtrend with a 13,000 decrease to 916,000.
However, wage developments were more mixed. At a 5.6 percent rate, annual growth in the three months to February was only unchanged, the first time it has not fallen since the three months to July last year and a little firmer than forecast. By contrast, on the same basis, regular earnings dipped a tick to 6.0 percent, their softest reading since the third quarter of 2022. That said, both measures are still uncomfortably high.
In sum, the new report shows some further loosening in overall labour market conditions and a further very limited easing in wage pressures. Still, in line with last month's results, the market remains very tight and earnings too high to accommodate the two percent inflation target without a marked improvement in productivity. Tomorrow's CPI update might change things but for now, most BoE MPC members will resist any cut in Bank Rate until there is more concrete evidence that inflationary pressures are under control. The UK's RPI and RPI-P now stand at minus 2 and 6 respectively, essentially showing that overall economic activity is performing much as expected.
Market Consensus Before Announcement
Average earnings growth is seen dipping from 5.6 percent to a still high 5.5 percent while the ILO jobless rate is put at a still low 4.0 percent after 3.9 percent in the three months to January.
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.
