United Kingdom: Labor market remains robust in December-February period
In the December-February period, the unemployment rate remained at a multi-decade low of 3.9%, while the employment rate stayed at a joint-record high. Employment rose by 179,000 compared to September-November, matching market expectations, due to more full-time and part-time positions. The tight labor market continued to support wage pressures, with nominal earnings growth excluding bonuses coming in at 3.4%, markedly outpacing the rate of inflation.
Looking ahead, wage growth should stay strong, supported by low unemployment. Coupled with mild price pressures, this should support purchasing power and private spending. However, it is uncertain whether the labor market will be able to maintain such strong momentum given no imminent end to Brexit uncertainty is in sight.
According to James Smith, economist at ING: “At 3.4%, regular pay is growing close to its fastest rate since the financial crisis, and this comes as firms in certain sectors are finding it harder to attract/retain staff. […] In principle, there are few reasons to expect this trend to fade imminently, although amid all of the uncertainty, we’d note the number of people on the unemployed claimant count has begun to exceed the number of job vacancies – perhaps a sign of some weakness ahead.”