United Kingdom: Labor market appears to soften at end of Q1
According to the statistical office, vacancy numbers declined in the three months to March for the 21th consecutive three-month period, but were still above pre-pandemic levels. In addition, employment fell by 67,000 in month-on-month terms in March, coming after February’s decline, while the unemployment rate rose to 4.2% in December–February, the highest rate since last August. More positively, at 5.5% year on year in February, wage growth continued to outpace inflation, pointing to improving consumer purchasing power.
Taken together, the latest data suggests that the jobs market weakened towards the end of Q1. Our Consensus is for the unemployment rate to remain close to its current level in the coming quarters, staying below the G7 average.
Summing up the current status of the labor market, Nomura analysts said:
“On the one hand, wage growth in this latest report is clearly concerning. […] That said, it isn’t necessarily true that this will result in a build up of inflationary pressures and feed into consumer prices. Indeed, it is possible that firms will eat into their profit margins […] On the other hand, the activity side of the labour market appears to be showing signs of cracking. The unemployment rate rose and employment markedly declined on the month, even if that was generated by falling part-time (rather than full-time) Jobs.”