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United Kingdom Unemployment February 2024

United Kingdom: Labor market remains robust midway through Q1 2024

According to the statistical office, vacancy numbers declined in the three months to February for the 20th consecutive three-month period, but were still above pre-pandemic levels. More positively, employment increased for the sixth straight month, while the unemployment rate remained historically low at 3.9% in November–January. In addition, wage growth clocked 5.5% year on year in January, notably above the rate of inflation and thus pointing to improving consumer purchasing power.

Our Consensus is for the unemployment rate to rise slightly in the coming quarters as the effect of past rate hikes is increasingly felt, but to remain below the G7 average at slightly over 4%.

On the implications for the Bank of England’s monetary stance, ING’s James Smith said:

“Ultimately, the BoE will want to see more evidence of pay slowing before acting. The good news is that the most recent survey of Chief Financial Officers (CFOs), conducted by the BoE, shows that wage growth expectations have finally dipped below 5%, having been stuck there or thereabouts for the best part of a year. But we’ll see the National Living Wage increase by close to 10% again in April, and while this is unlikely to have a huge impact on the wider pay numbers, we suspect the Bank will want to see some data on it before acting.”

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