| Consensus | Actual | Previous | Revised | |
|---|---|---|---|---|
| Claimant Count - M/M | 95,000 | 23,700 | 135,000 | 102,300 |
| Claimant Count Unemployment Rate | 4.7% | 4.7% | ||
| ILO Unemployment Rate | 4.2% | 4.1% | 4.2% | |
| Average Earnings - Y/Y | 4.1% | 4.0% | 4.5% | 4.6% |
Highlights
The July/August report paints another mixed picture of the overall labour market with generally surprisingly tight conditions not standing in the way of slower than expected wage growth.
August claimant count unemployment rose 23,700 on the month to 1.792 million, well below the market consensus and also markedly less than a downwardly revised 102,300 gain in July. This was the fifth increase in as many months but small enough to leave the jobless rate steady at 4.7 percent, matching its highest reading since December 2021.
Meantime, the ILO data for the three months to July showed joblessness declining 74,000 to 1.437 million, its second successive drop and its second lowest level since November-January. The decrease was sharp enough to trim another tick off the unemployment rate which, at a surprisingly low 4.1 percent, saw its lowest mark since the three months to January. Moreover, employment over the same period was up a hefty 265,000 at 33.232 million, its strongest level since the first quarter of 2023 and high enough to lift the employment rate by 0.3 percentage points to 74.8 percent.
However, by contrast, the provisional August payroll data showed a sizeable 59,000 monthly decline following a revised 6,000 fall in July. Vacancies also extended their downward spiral in the three months to August. A 42,000 decline to 857,000 marked the steepest drop since the fourth quarter of last year and made for the weakest level since March-May 2021. Even so they remain well above their pre-Covid levels.
Wage growth eased significantly again, and by marginally more than market expectations. At 4.0 percent, average annual growth in the three months to July was well down from 4.6 percent previously, a tick short of forecasts and the slowest since the three months to November 2020. Regular earnings also decelerated but, at 5.1 percent after 5.4 percent, remain historically high.
Consequently, and in line with last month's report, today's update offers something for the BoE MPC's doves and hawks alike. That said, neither camp puts much faith in the data. This leaves the September call on Bank Rate still uncertain and in part dependent upon tomorrow's GDP data and, in particular, next week's August CPI. The UK's RPI now stands at 2 and the RPI-P at minus 2, meaning that economic activity in general is performing much as anticipated.
August claimant count unemployment rose 23,700 on the month to 1.792 million, well below the market consensus and also markedly less than a downwardly revised 102,300 gain in July. This was the fifth increase in as many months but small enough to leave the jobless rate steady at 4.7 percent, matching its highest reading since December 2021.
Meantime, the ILO data for the three months to July showed joblessness declining 74,000 to 1.437 million, its second successive drop and its second lowest level since November-January. The decrease was sharp enough to trim another tick off the unemployment rate which, at a surprisingly low 4.1 percent, saw its lowest mark since the three months to January. Moreover, employment over the same period was up a hefty 265,000 at 33.232 million, its strongest level since the first quarter of 2023 and high enough to lift the employment rate by 0.3 percentage points to 74.8 percent.
However, by contrast, the provisional August payroll data showed a sizeable 59,000 monthly decline following a revised 6,000 fall in July. Vacancies also extended their downward spiral in the three months to August. A 42,000 decline to 857,000 marked the steepest drop since the fourth quarter of last year and made for the weakest level since March-May 2021. Even so they remain well above their pre-Covid levels.
Wage growth eased significantly again, and by marginally more than market expectations. At 4.0 percent, average annual growth in the three months to July was well down from 4.6 percent previously, a tick short of forecasts and the slowest since the three months to November 2020. Regular earnings also decelerated but, at 5.1 percent after 5.4 percent, remain historically high.
Consequently, and in line with last month's report, today's update offers something for the BoE MPC's doves and hawks alike. That said, neither camp puts much faith in the data. This leaves the September call on Bank Rate still uncertain and in part dependent upon tomorrow's GDP data and, in particular, next week's August CPI. The UK's RPI now stands at 2 and the RPI-P at minus 2, meaning that economic activity in general is performing much as anticipated.
Market Consensus Before Announcement
The ILO unemployment rate for the three months to July is expected to hold at the previous period's surprisingly low 4.2 percent. Average earnings growth for the three months to July is seen easing to 4.1 percent from the second quarter's as-expected 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.
