UK jobs market cools again but worries remain for Bank of England
Send a link to a friend
[April 16, 2024] By
Suban Abdulla and William Schomberg
LONDON (Reuters) -Britain's labor market lost a bit more of its
inflationary heat, data showed on Tuesday, offering some relief to the
Bank of England, but stubborn underlying problems continued with wage
growth still high and more people dropping out of the workforce.
Core wages rose by the least since mid-2022 in the three months to
February but remained strong by historical standards, according to the
Office for National Statistics figures.
Regular wages excluding bonuses - which BoE is watching as it considers
when to start cutting interest rates - grew by 6.0% compared with the
same period a year earlier, only slightly weaker than a 6.1% rise in the
November-to-January period.
A Reuters poll of economists had forecast a sharper slowdown to 5.8%.
The unemployment rate rose by more than expected to 4.2% from 3.9%, also
suggesting a loss of momentum in the jobs market, but the ONS said it
was still overhauling its survey which produces that figure and it was
subject to volatility.
Yael Selfin, chief economist at KPMG UK, said the rise in the
unemployment rate and the latest slowing of pay pressure suggested the
labor market was generating less inflation.
"The slight easing in regular pay growth will bring some comfort for the
Bank of England which has relied on the pay data as a key gauge of
domestic inflationary pressure," Selfin said.
![](http://archives.lincolndailynews.com/2024/Apr/16/images/ads/current/danieleeten_sda_SFARM_2024.png)
Sterling briefly fell against the U.S. dollar and euro immediately after
the data was published, and investors trimmed their bets on BoE rate
cuts this year with a first reduction in Bank Rate fully priced in for
September.
Growth in total pay, which includes more volatile bonus payments, was
unchanged at 5.6%. The Reuters poll had pointed to a slight slowdown to
5.5%.
Strong pay increases have eased the squeeze on household finances which
were hit by the surge in inflation in 2022, offering some hope to Prime
Minister Rishi Sunak who is battling weak opinion poll ratings before an
election expected this year.
Tuesday's figures showed regular pay adjusted for the consumer price
index rose by 2.1% in the three months to February, the biggest annual
increase since mid-2021.
![](http://archives.lincolndailynews.com/2024/Apr/16/images/ads/current/ldn_smallsda_BUSINESSMAG_2023.png)
[to top of second column] |
![](../images/041624PIX/busine73.jpg)
Commuters walk during the morning rush hour near the Bank of England
in the City of London financial district in London, Britain,
February 8, 2024. REUTERS/Toby Melville/File Photo
![](http://archives.lincolndailynews.com/2024/Apr/16/images/ads/current/graue_lda_SFARM_2024.png)
CONCERNS REMAIN
The rate of inactivity in the jobs market - which measures people
who are not in employment or seeking work and which the BoE hopes to
see fall to ease pressure on wages and inflation - rose to 22.2%,
the highest since mid-2015.
The number of people registered as long-term sick hit its highest
since records began in 1993 at 2.83 million.
"The UK's labour market looks increasingly two-speed. Unemployment
is rising and inactivity persists," Matthew Percival, the
Confederation of British Industry's future of work & skills
director, said.
"Meanwhile there remain a heightened number of jobs that employers
can't fill, causing pay to rise faster than compatible with
significantly cutting interest rates."
Vacancies fell for the 21st time in a row in the three months to
March, dropping by 13,000 from the October-to-December period and
down by 204,000 on a year earlier at 916,000. But they remained
120,000 above their pre-COVID level.
"The labour market continues to gradually cool but continued high
wage growth underlines concerns over inflation persistence," Jack
Kennedy, senior economist at jobs platform Indeed, said.
"With stubborn US inflation having dimmed hopes of an imminent Fed
rate cut, prospects for UK rate cuts being cut before autumn also
look questionable."
Britain's minimum wage for workers aged 21 and above rose by almost
10% to 11.44 pounds ($14.23) an hour earlier this month. Some
employers have said big increases in recent years - which reflect in
large part the jump in inflation - have put pressure on them to
increase their prices or reduce hiring.
The Recruitment and Employment Confederation said last week that
demand for staff fell for the fifth month in a row in March.
($1 = 0.8039 pounds)
(Reporting by Suban Abdulla Editing by William Schomberg and Ros
Russell)
[© 2024 Thomson Reuters. All rights
reserved.]
This material may not be published,
broadcast, rewritten or redistributed.
Thompson Reuters is solely responsible for this content. |