| Consensus | Actual | Previous | Revised | |
|---|---|---|---|---|
| Claimant Count - M/M | 23,400 | 32,300 | 50,400 | 51,900 |
| Claimant Count Unemployment Rate | 4.4% | 4.3% | ||
| ILO Unemployment Rate | 4.4% | 4.4% | 4.4% | |
| Average Earnings - Y/Y | 5.7% | 5.7% | 5.9% |
Highlights
The latest survey shows a gradual cooling of overall labour market conditions but, while weaker, still high earnings growth.
Claimant count unemployment rose a surprisingly steep 32,300 on the month to 1.663 million in June following a marginally larger revised 51,900 increase in May. The advance was the third in as many months and the ninth since last September. It was also large enough to lift the jobless rate by a tick to 4.4 percent, matching its highest mark since February 2022.
Meantime, the ILO data for March-May showed the number of people out of work climbing 88,000 to 1.528 million. This left the jobless rate at 4.4 percent, matching the market consensus and its highest point since June-August 2021. Employment was up 19,000 at 32,999, its first rise in five months, but, at 74.4 percent, the rate was still 0.1 percentage point lower than in the previous 3-month period. It was also down 1.1 percentage points on the year.
Other data were equally mixed. Hence, the payroll data showed a 15,513 increase to 30.424 million in June, its second rise in three months and a new high. However, vacancies last quarter dropped a further 30,000 on the quarter although were still up 93,000 on the year and were above their pre-Covid levels.
Wage growth eased but only in line with market expectations and remained high. At a 5.7 percent rate, average annual growth in the three months to May was down a couple of ticks versus the previous month and at its lowest mark since the three months to January. Nonetheless, with regular earnings matching that rate, albeit down a sharper 0.3 percentage points, wages will need to slow more to be consistent with the 2 percent inflation target.
Today's update suggest that the labour market is moving in the right direction for the BoE. However, in general conditions remain quite tight as reflected in the only gentle deceleration in wage growth. As such, the August MPC meeting will probably want to see additional evidence of cooling inflationary pressures before finally pulling the trigger on an interest rate cut. The UK's RPI now stands at exactly zero while the RPI-P is at 18. Overall economic activity is performing in line with market forecasts.
Claimant count unemployment rose a surprisingly steep 32,300 on the month to 1.663 million in June following a marginally larger revised 51,900 increase in May. The advance was the third in as many months and the ninth since last September. It was also large enough to lift the jobless rate by a tick to 4.4 percent, matching its highest mark since February 2022.
Meantime, the ILO data for March-May showed the number of people out of work climbing 88,000 to 1.528 million. This left the jobless rate at 4.4 percent, matching the market consensus and its highest point since June-August 2021. Employment was up 19,000 at 32,999, its first rise in five months, but, at 74.4 percent, the rate was still 0.1 percentage point lower than in the previous 3-month period. It was also down 1.1 percentage points on the year.
Other data were equally mixed. Hence, the payroll data showed a 15,513 increase to 30.424 million in June, its second rise in three months and a new high. However, vacancies last quarter dropped a further 30,000 on the quarter although were still up 93,000 on the year and were above their pre-Covid levels.
Wage growth eased but only in line with market expectations and remained high. At a 5.7 percent rate, average annual growth in the three months to May was down a couple of ticks versus the previous month and at its lowest mark since the three months to January. Nonetheless, with regular earnings matching that rate, albeit down a sharper 0.3 percentage points, wages will need to slow more to be consistent with the 2 percent inflation target.
Today's update suggest that the labour market is moving in the right direction for the BoE. However, in general conditions remain quite tight as reflected in the only gentle deceleration in wage growth. As such, the August MPC meeting will probably want to see additional evidence of cooling inflationary pressures before finally pulling the trigger on an interest rate cut. The UK's RPI now stands at exactly zero while the RPI-P is at 18. Overall economic activity is performing in line with market forecasts.
Market Consensus Before Announcement
The ILO unemployment rate for the three months to May is expected to hold steady at 4.4 percent. Annual average earnings growth is forecast to dip a couple of ticks to 5.7 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.
