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UK DATA: Budget impacts show in DMP data; something for everyone in the report

UK DATA
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  • This is the first post-Budget DMP survey (so the first since the National Living Wage and employer NIC increases were confirmed), but note that most of the "headline" numbers are produced on a 3-month rolling basis, so aren't fully accounted for yet. However, looking at the single month prints, it is clear to see a big shift in employment expectations (negative over the next year), expected own-price growth hit a 6 month high but expected wage growth actually decelerated. So it appears that firms will be more reluctant to hire, will be passing on at least some of the costs of the employer NIC increase but wages will be squeezed a little (particularly when you take into account some wages are going to be rising 6.7%).
  • Firm's expected own-price growth increased to 3.7% in the three months to November (up from 3.5% in the 3-months to Oct). The single number print of 3.8%Y/Y was the highest since May (up 0.2ppt from both Sep and Oct). Part of the increase in the 3-month rate was the pickup in the single month print, but there was also a low outlier in August of 3.3% that drops out of the 3-month rate.
  • Mean expected employment growth over the next year fell to 0.7% in the 3 months to November (from 1.1% in the 3-months to Oct and Sep). This is the first 3-month print below 1.0% since December 2020 and was driven by a big fall in the single month print to -0.1% in November (from 1.1% in both Oct and Sep). This is the first negative single month print since October 2020.
  • However, expected year-ahead wage growth actually decelerated to 4.0% in the 3 months to November (from 4.1% in the prior four readings). The single month print fell to 3.8% after four consecutive 4.1% prints.
  • In terms of realised numbers: own price growth continued to decelerate further on the 3-month measure to 3.9%Y/Y, wage growth on a 3-month measure fell to 5.5% (lowest since July 2022) while realised employment growth of 0.5% on the 3-month average is in line with the 0.5-0.6% range seen for four months now.
  • In general the survey showed little reason for MPC members to really change their views - those looking for gradual cuts will be looking at the conflicting signs for employment and price growth. Those more in the "case 1" more activist camp will note that employment expectations and wage growth are decelerating, while those concerned with case 3 will see no clear direction here with price growth remaining higher-for-longer.
  • SONIA futures are marginally lower than prior to the data with GBPUSD marginally higher.
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  • This is the first post-Budget DMP survey (so the first since the National Living Wage and employer NIC increases were confirmed), but note that most of the "headline" numbers are produced on a 3-month rolling basis, so aren't fully accounted for yet. However, looking at the single month prints, it is clear to see a big shift in employment expectations (negative over the next year), expected own-price growth hit a 6 month high but expected wage growth actually decelerated. So it appears that firms will be more reluctant to hire, will be passing on at least some of the costs of the employer NIC increase but wages will be squeezed a little (particularly when you take into account some wages are going to be rising 6.7%).
  • Firm's expected own-price growth increased to 3.7% in the three months to November (up from 3.5% in the 3-months to Oct). The single number print of 3.8%Y/Y was the highest since May (up 0.2ppt from both Sep and Oct). Part of the increase in the 3-month rate was the pickup in the single month print, but there was also a low outlier in August of 3.3% that drops out of the 3-month rate.
  • Mean expected employment growth over the next year fell to 0.7% in the 3 months to November (from 1.1% in the 3-months to Oct and Sep). This is the first 3-month print below 1.0% since December 2020 and was driven by a big fall in the single month print to -0.1% in November (from 1.1% in both Oct and Sep). This is the first negative single month print since October 2020.
  • However, expected year-ahead wage growth actually decelerated to 4.0% in the 3 months to November (from 4.1% in the prior four readings). The single month print fell to 3.8% after four consecutive 4.1% prints.
  • In terms of realised numbers: own price growth continued to decelerate further on the 3-month measure to 3.9%Y/Y, wage growth on a 3-month measure fell to 5.5% (lowest since July 2022) while realised employment growth of 0.5% on the 3-month average is in line with the 0.5-0.6% range seen for four months now.
  • In general the survey showed little reason for MPC members to really change their views - those looking for gradual cuts will be looking at the conflicting signs for employment and price growth. Those more in the "case 1" more activist camp will note that employment expectations and wage growth are decelerating, while those concerned with case 3 will see no clear direction here with price growth remaining higher-for-longer.
  • SONIA futures are marginally lower than prior to the data with GBPUSD marginally higher.