DMP survey increases probability of August cut

The BOE DMP survey showed realised wage growth remaining sticky but on all other metrics this was a pretty dovish report. Expected wage growth is lower, employment growth matched the lowest levels since 2020 while price growth and unit cost growth ticked lower too. This will be encouraging for the more dovish members of the MPC and increases the probability of an August cut, in our view.

• The 3-month average of expected wage growth declined a further 0.3ppt to 4.2%Y/Y in the 3-months to June 2024 and is now down 0.7ppt on the quarter. The last four 3ma readings have now all been below 5%, and this followed 8 consecutive periods of either 5.1%Y/Y or 5.2%Y/Y (and was higher for the 10 periods before that). This is the lowest print of since the survey was begun in May 2022.
• Realised wage growth remained sticky at 6.0%Y/Y in the 3-months to June - unchanged from the 3-months to May, the first time in four months we haven't seen a decline in the 3-month reading (but still 1.0ppt lower than the peak of 7.0%Y/Y in the 3 months to November).
• The single month figure for realised employment growth fell to 0.5% in June, the lowest since August 2021 while the 3-month reading fell 0.4ppt to 1.1% in the 3-months to June, the lowest since the 3-months to October 2021.
• Expected employment growth was down 0.1ppt at 1.2%Y/Y in the 3-months to June (and matching the lows seen in Sep/Oct 2023). Note that the 3-month expected employment growth has not been below 1.2%Y/Y since December 2020.
• Expected price growth remained at 3.9% in the 3-months to June (ticking down slightly on an unrounded basis sa the June reading of 3.6% was below the March reading of 3.7%). This is down from a peak of 6.6%Y/Y in September 2022.
• The May survey included questions on unit cost growth for the first time since July 2023. Realised unit cost growth ticked down in June to 5.7%Y/Y from 6.2%Y/Y in May (down from 9.5%Y/Y in July 2023) while expected unit cost growth was 4.8%Y/Y in June down from 5.4%Y/Y in May (down from 6.8%Y/Y in July 2023).