U.k. job creation decelerates markedly 3m/3m in June, jobless rate falls to 4 pct
Source: FxWire Pro - Commentary / 14 Aug 2018 16:56:52 America/New_York
The U.K. labor market data released today brought mixed messages regarding the current state of the U.K. economy. In spite of the moderate rate of economic growth in the first half of 2018, employment growth was quite solid. Nevertheless, job creation has decelerated markedly from the near three-year-high of 197k three-month-on-three-month in March, falling to an eight-month low of 42k in June. However, unemployment continued to fall, and so the headline three-month jobless rate dropped 0.2 percentage point to 4 percent, the lowest since 1975 and now unambiguously below the BoE’s estimate. Nevertheless, the joblessness reflected people dropping out of the labor force, as the inactivity rate also picked up by 0.2 percentage point.
Slower growth in employment and stronger GDP growth in the second quarter suggests a welcome rebound in productivity. Indeed, the data released today affirmed that output per hour rose 0.4 percent quarter-on-quarter, recovering from a fall of the same magnitude in the first quarter. However, despite this higher productivity and below-equilibrium jobless rate, the latest wage figures were weak. Both headline and regular pay growth dropped slightly to 2.4 percent and 2.7 percent, respectively. At that level, the headline rate was widely consistent with its average of recent years, as well as the latest BoE forecast for this year, which is hardly in line with rising domestically-generated inflationary pressures over the near term, noted Daiwa Capital Market Research in a report.
“With the level of vacancies having risen to a series high, going forward we expect a decent pace of employment growth to be maintained”, added Daiwa Capital Market Research.
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