UK labour market data, June 2018 - PwC comments

Jun 12, 2018

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Commenting on the ONS labour market data out today, John Hawksworth, chief economist at PwC, said: 

"Today's data confirmed generally positive trends in the jobs market in recent months, with the employment rate remaining at a record high and the unemployment rate at its lowest levels since 1975. 

"But average hours worked fell back somewhat in the last three months. Total hours worked actually fell slightly over this period compared to the previous three months. This helps to explain why total output growth has been relatively weak recently despite solid growth in the number of jobs.

"After increasing markedly to 2.9% in the three months to March, regular pay growth slipped back a little to 2.8% in the three months to April. But real pay growth remains in positive territory given consumer price inflation has eased to 2.4%.

"Overall, this new data does not significantly alter the big picture of a modestly growing economy combining relatively strong growth in jobs with weaker growth in productivity per worker and, linked to this, only modest real pay growth."

Ends.

"Today's data is good news in terms of both real wages returning to positive growth and the UK employment rate hitting a new record high. But increasing evidence of a tightening labour market feeding through into higher wages points strongly to an interest rate rise in May.

”On the jobs front, employment growth in the past quarter was not as strong as in some previous periods, but was nonetheless sufficient to push the employment rate to a new record high of 75.4%. 

”The female employment rate also rose to a record high of 71%, which has played a major role in the positive UK jobs trend seen in recent years. This upward trend is partly due to the effect of the rising female state pension age in shifting the historic female retirement age and to continued strong demand for labour in service sectors like health, retail and hospitality where women make up a relatively large proportion of the workforce.

”Last year, earnings growth remained stubbornly low despite strong jobs growth, but it now picking up quite quickly. Real earnings growth has edged back into positive territory, although the level of real earnings still remains some way below its pre-crisis peak, so many workers may still not feel that they are all that much better off.


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Evidence of stronger wage growth reinforces the already strong likelihood that the MPC will raise interest rates by 0.25% at its next meeting in May."

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