| Consensus | Actual | Previous | Revised | |
|---|---|---|---|---|
| Claimant Count - M/M | 14,500 | 135,000 | 32,300 | 36,200 |
| Claimant Count Unemployment Rate | 4.7% | 4.4% | ||
| ILO Unemployment Rate | 4.5% | 4.2% | 4.4% | 4.5% |
| Average Earnings - Y/Y | 4.5% | 4.5% | 5.7% |
Highlights
The new survey paints a mixed picture of overall labour market conditions but, importantly for interest rates, includes a marked slowdown in earnings growth.
Claimant count unemployment rose a surprisingly sharp 135,000 on the month in July, easily the steepest rise since June 2020 and following a marginally larger revised 51,900 increase in May. The advance was the fourth in as many months and the tenth since last September. It was also large enough to lift the jobless rate by 0.3 percentage points to 4.7 percent, matching its highest mark since December 2021.
However, the ILO data for second quarter showed a surprise fall with a 51,000 drop that reduced the unemployment rate to 4.2 percent, fully three ticks short of the market consensus. This matched its lowest point since the three months ending January 2024. At the same time, employment was up 97,000 and, at 33.094 million, hit its highest level in five months. The employment rate now stands at 74.5 percent, its second successive increase albeit still 0.7 percentage points lower on the year.
Elsewhere, the July payroll data showed a 24,174 monthly increase to 30.437 million, its third straight gain and another new high. However, vacancies in the three months to July continued to spiral down, declining 26,000 to 884,000. This constitutes their weakest reading since the second quarter of 2021 although they remain well above their pre-Covid levels.
Wage growth eased significantly, but only in line with market expectations. At 4.5 percent, average annual growth in the second quarter was well down from 5.7 percent previously and the slowest since the three months to November 2021. Regular earnings also decelerated but, at 5.4 percent after an upwardly revised 5.8 percent, remain worryingly high.
Consequently, there is something for the BoE MPC's doves and hawks alike in today's report, although neither camp seems to put much faith in the data. This leaves the September call on Bank Rate uncertain and will make for added interest in tomorrow's July CPI report. The UK's RPI now stands at 21 and the RPI-P is at 19, meaning that economic activity in general is performing slightly more strongly than market forecasts.
Claimant count unemployment rose a surprisingly sharp 135,000 on the month in July, easily the steepest rise since June 2020 and following a marginally larger revised 51,900 increase in May. The advance was the fourth in as many months and the tenth since last September. It was also large enough to lift the jobless rate by 0.3 percentage points to 4.7 percent, matching its highest mark since December 2021.
However, the ILO data for second quarter showed a surprise fall with a 51,000 drop that reduced the unemployment rate to 4.2 percent, fully three ticks short of the market consensus. This matched its lowest point since the three months ending January 2024. At the same time, employment was up 97,000 and, at 33.094 million, hit its highest level in five months. The employment rate now stands at 74.5 percent, its second successive increase albeit still 0.7 percentage points lower on the year.
Elsewhere, the July payroll data showed a 24,174 monthly increase to 30.437 million, its third straight gain and another new high. However, vacancies in the three months to July continued to spiral down, declining 26,000 to 884,000. This constitutes their weakest reading since the second quarter of 2021 although they remain well above their pre-Covid levels.
Wage growth eased significantly, but only in line with market expectations. At 4.5 percent, average annual growth in the second quarter was well down from 5.7 percent previously and the slowest since the three months to November 2021. Regular earnings also decelerated but, at 5.4 percent after an upwardly revised 5.8 percent, remain worryingly high.
Consequently, there is something for the BoE MPC's doves and hawks alike in today's report, although neither camp seems to put much faith in the data. This leaves the September call on Bank Rate uncertain and will make for added interest in tomorrow's July CPI report. The UK's RPI now stands at 21 and the RPI-P is at 19, meaning that economic activity in general is performing slightly more strongly than market forecasts.
Market Consensus Before Announcement
The ILO unemployment rate for the second quarter is expected to edge higher to 4.5 percent from 4.4 percent while average earnings growth slows sharply to also 4.5 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.
