| Consensus | Actual | Previous | Revised | |
|---|---|---|---|---|
| Claimant Count - M/M | 13,900 | 8,900 | 10,900 | -2,400 |
| Claimant Count Unemployment Rate | 4.1% | 4.0% | 4.1% | |
| ILO Unemployment Rate | 4.3% | 4.3% | 4.2% | |
| Average Earnings - Y/Y | 5.4% | 5.7% | 5.6% | 5.7% |
Highlights
The March/April report paints a mixed picture of the labour market with some further signs of cooling economic activity but also ominously high wage growth.
Claimant count unemployment rose 8,900 on the month in April, less than expected and following a revised decline in March. The latest increase was again small enough to leave the jobless rate unchanged at a historically low 4.1 percent.
Meantime, the first quarter ILO data showed the number of people out of work climbing a sizeable 166,000, its steepest increase since the three months to November 2020. This was large enough to lift the jobless rate to 4.3 percent, in line with the market consensus but matching its highest print since the Covid-impacted third quarter of 2021. Employment was again weak, falling a hefty 178,000 versus the fourth quarter. This was its worst performance since June-August last year but still left the employment rate steady at 74.5 percent. More up to date, the payroll data also showed an 84,556 decrease on the month in April, the third straight decrease and the sharpest since May 2020. In addition, looking forward, vacancies in the three months to April dropped a further 26,000 to 898,000, their lowest mark since the second quarter of 2021.
However, wage developments were surprisingly robust. At a 5.7 percent rate, average annual growth in the first quarter was only unchanged from its upwardly revised reading in December-February and well above expectations. Similarly, the rate for regular pay was also sticky at 6.0 percent.
In sum, the new report provides something for the BoE MPC's doves and hawks alike. Overall labour market conditions are clearly easing but the market remains tight and, it seems, tight enough to prevent any additional progress on reducing pay growth. As such, the majority of MPC members are now probably rather less likely to vote for a June cut in Bank Rate, particularly with the UK's RPI (44) and RPI-P (55) showing that economic activity in general easily outperforming market forecasts.
Claimant count unemployment rose 8,900 on the month in April, less than expected and following a revised decline in March. The latest increase was again small enough to leave the jobless rate unchanged at a historically low 4.1 percent.
Meantime, the first quarter ILO data showed the number of people out of work climbing a sizeable 166,000, its steepest increase since the three months to November 2020. This was large enough to lift the jobless rate to 4.3 percent, in line with the market consensus but matching its highest print since the Covid-impacted third quarter of 2021. Employment was again weak, falling a hefty 178,000 versus the fourth quarter. This was its worst performance since June-August last year but still left the employment rate steady at 74.5 percent. More up to date, the payroll data also showed an 84,556 decrease on the month in April, the third straight decrease and the sharpest since May 2020. In addition, looking forward, vacancies in the three months to April dropped a further 26,000 to 898,000, their lowest mark since the second quarter of 2021.
However, wage developments were surprisingly robust. At a 5.7 percent rate, average annual growth in the first quarter was only unchanged from its upwardly revised reading in December-February and well above expectations. Similarly, the rate for regular pay was also sticky at 6.0 percent.
In sum, the new report provides something for the BoE MPC's doves and hawks alike. Overall labour market conditions are clearly easing but the market remains tight and, it seems, tight enough to prevent any additional progress on reducing pay growth. As such, the majority of MPC members are now probably rather less likely to vote for a June cut in Bank Rate, particularly with the UK's RPI (44) and RPI-P (55) showing that economic activity in general easily outperforming market forecasts.
Market Consensus Before Announcement
The ILO unemployment rate for the three months to April is expected to edge higher to 4.3 percent versus 4.2 percent in March. Average earnings growth for the three months to April are seen easing slightly to 5.4 percent from 5.6 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.
