UK labor numbers show underlying trend intact - Lloyds

Analysts from Lloyds Bank, today’s employment numbers from the United Kingdom are still not diverging meaningfully enough from the assumptions of the Monetary Policy Committee (MPC) of the Bank of England; as the data stand, they provide little urgency for the central bank to move in either direction.

Key Quotes: 

“Today’s UK labour market figures for the 3 months to February saw recent underlying trends left broadly intact. The unemployment rate was unchanged at 5.1%, as expected, still holding around a level at which capacity constraints might typically put upward pressure on wages. Employment levels are still rising, although the latest outturn confirms that the pace of growth is easing, with a rise of just 20k against 3 months ago.” 

“There remains little sign of significant pay pressure. The latest data in fact saw headline pay growth drop back, with average weekly pay (including bonuses) rising at a 1.8% annual pace, from 2.1% previously, much weaker than expected. However, excluding bonuses, regular pay growth held at 2.2%, a touch firmer than expected – arguably this is the more important metric around turns of year as bonuses tend to distort the headline total pay measure.”

“A narrative of recovering productivity growth has long anticipated the moderation in the pace of job gains, but the scale of the recent easing – as final data available in advance of the May Inflation Report – may give the MPC some pause for thought on the available spare capacity in the labour market."

“Overall, recent labour market outturns are still not diverging meaningfully enough from the MPC’s assumptions; as the data stand, they provide little urgency for an MPC move – in either direction.”