UK Labour Market: March 2016
Every month the Office of national statistics release a series of figures to a given schedule measuring particular aspects of the UK economy. These figures point to the health or lack of health of the current economy as well as providing indications of what is to come in terms of economic head or tail winds. As such, at the time these figures are released they can have considerable effect on the current market prices. It is important to know and understand the current market news release cycle to avoid problems.
Today we have the employment and wages figures for December 2015
Estimates of employment, unemployment, economic inactivity and other employment-related statistics for the UK.
There were 31.42 million people in work, 116,000 more than for August to October 2015 and 478,000 more than for a year earlier.
There were 22.94 million people working full-time, 302,000 more than for a year earlier. There were 8.48 million people working part-time, 177,000 more than for a year earlier.
The employment rate (the proportion of people aged from 16 to 64 who were in work) was 74.1%, the joint highest since comparable records began in 1971.
There were 1.68 million unemployed people (people not in work but seeking and available to work), 28,000 fewer than for August to October 2015 and 171,000 fewer than for a year earlier.
There were 923,000 unemployed men, 102,000 fewer than for a year earlier. There were 762,000 unemployed women, 69,000 fewer than for a year earlier.
The unemployment rate was 5.1%, lower than for a year earlier (5.7%). The unemployment rate is the proportion of the labour force (those in work plus those unemployed) that were unemployed.
There were 8.89 million people aged from 16 to 64 who were economically inactive (not working and not seeking or available to work), 40,000 fewer than for August to October 2015 and 136,000 fewer than for a year earlier.
The inactivity rate (the proportion of people aged from 16 to 64 who were economically inactive) was 21.8%, lower than for a year earlier (22.2%) and only slightly higher than the record low of 21.7% last recorded for July to September 1990.
Average weekly earnings for employees in Great Britain increased by 2.1% including bonuses and by 2.2% excluding bonuses compared with a year earlier.
Labor data has proved a puzzle to BOE policy makers in recent years, with record employment and a falling jobless rate not yet boosting wage growth.
The BOE will probably keep its key interest rate at 0.5 percent when it announces its latest decision on Thursday. With inflation far below their 2 percent target, officials have indicated they’re in no rush to raise the rate, which has been at a record low for seven years.
Still, they’re monitoring the job data for any signs that the tightness in the labor market will general inflation pressures.
Dan Hanson, an economist at Bloomberg Intelligence in London, says the U.K. may see only a modest pickup in productivity growth, which would mean unit wage costs accelerating.
“Should the expansion continue uninterrupted, cost pressures emanating from the labor market are likely to prompt the BOE to lift rates in November, sooner than markets expect,” he said in a note on Tuesday.
Again good figures that we have almost come to expect with each release. The more important aspect is whether wages are increasing and they indeed did come in fractionally better. This however, is unlikely to have moved the BoE so interest rates are still in the distance. Unless something unexpected happens it is likely to be until after the referendum that thoughts again turn to when interest rates will rise.