UK: Unemployment rate lowest since 1975 - Natixis

UK labor market continued to tighten in the three months to May as the unemployment rate fell to 4.5%, lowest since 1975 while the employment growth was the strongest since December 2015 (+175k) and in addition regular pay growth edged up to 2% compared to 1.8% last month, explains Sylwia Hubar, Research Analyst at Natixis. In contrast, however, pay growth incl. bonuses slowed further to 1.8% (from 2.1%), she further adds.

Key Quotes

“Interestingly, a rebound in part-time workers not wishing to get a full-time job and decline in average hours worked pointed to more exhausted labor supply. Quite the reverse, labor demand still stayed close to a record high, as reflected by the number of vacancies in the three months to June.”

“Increasingly tighter labor market conditions are promising for the BoE withdrawal of some last year’s stimulus this year. We expect the BoE to hike the Bank Rate by 25bp in November.”