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United Kingdom Labor Market December 2021

United Kingdom: Labor market performs well in Q4

According to the ONS, in October–December the unemployment rate registered 4.1%, matching the reading from the previous rolling quarter. Experimental data for January showed that employment rose by 108,000 from December, while job vacancies set a new record high in the three months to January. The data thus suggests a negligible impact from the end of the government’s wage subsidy scheme (furlough) and surging Covid-19 cases. That said, real wages shrank marginally in the three months to December amid high inflation.

On the latest reading and the implications for monetary policy, George Buckley, economist at Nomura, commented:

“There were plenty more positive data points in today’s labour market report to support the case for ongoing rate rises from the Bank of England. While we continue to think that the Bank will raise rates by 25 basis points in March, there may be some on the MPC who use today’s report as providing support for a more substantial tightening. Market pricing for 80 basis points in hikes over the next two meetings suggests that the market expects a 50bp move in either March or May.”

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