Commenting on the latest ONS labour market data, Jake Finney, Senior Economist at PwC UK, says:
“The labour market is weakening as elevated policy uncertainty and weaker hiring start to bite. Crucially, the slowdown is now showing up in higher unemployment rather than further falls in vacancies, which are stabilising. As is often the case when the labour market slows, young people are at the sharp end of the rise in unemployment.
“The Bank of England warned in November that unemployment could rise to 5.5%, a level that may warrant more policy easing than is currently priced in. With unemployment now at 5.1%, up from 4.4% a year ago, there are signs it is moving in that direction. Even so, today’s data is unlikely to move the dial on a potential rate cut on 5 February. The Monetary Policy Committee is likely to wait for the inflation figures, but a March cut looks more likely. By then, further data releases should give the Bank greater confidence that conditions have eased.”
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