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DMP survey largely in line; but still points to stickiness and delayed cuts

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  • Overall there weren't huge changes in the DMP survey - so no huge monpol implications here. Expected wages, prices and employment were all broadly unchanged since last month. And the realised numbers for all of these showed further moderation. But overall the survey still points to some continued concerns of stickiness and improvements slower than some had hoped for. So if anything we see this as reinforcing expectations that cuts may not come as quickly as the market prices currently.
  • The key components worth watching in here are the inflation expectation components and wage expectations and employment growth component.
  • Expected year-ahead wage remained steady at 5.2% on a 3-month basis. This was the eigth consecutive release that saw the 3-month average rate at 5.1% or 5.2% (and is down from a peak of 6.0% in December 2022).
  • Expected price growth in February remained at 4.3% on a 3-month basis (it has now been 4.3% or 4.4% for 3 consecutive months). Realised price growth slowed on a 3-month average basis to 5.4% in the 3-months to February from 5.6% in the 3-months to January, 5.9% in the 3-months to December and 6.6% in the 3-months to November. Between June 2022 and October 2023 the survey stayed in a 7.1-8.1% range.
  • In terms of employment growth, the 3-month average of 2.3% of realised employment growth in the 3-months to February was 0.1ppt lower than in January and the lowest since November 2021.
  • Expected employment growth slowed for the first time since September by 0.1ppt to 1.6% in the 3-months to February (it had picked up to 1.7% on the 3-months to January from a trough of 1.2% seen in both September and October 2023).
  • Note that the BOE has been placing an increasing weight on this survey over the past few months - and even more so since the official ONS labour market data started to throw up more issues.
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  • Overall there weren't huge changes in the DMP survey - so no huge monpol implications here. Expected wages, prices and employment were all broadly unchanged since last month. And the realised numbers for all of these showed further moderation. But overall the survey still points to some continued concerns of stickiness and improvements slower than some had hoped for. So if anything we see this as reinforcing expectations that cuts may not come as quickly as the market prices currently.
  • The key components worth watching in here are the inflation expectation components and wage expectations and employment growth component.
  • Expected year-ahead wage remained steady at 5.2% on a 3-month basis. This was the eigth consecutive release that saw the 3-month average rate at 5.1% or 5.2% (and is down from a peak of 6.0% in December 2022).
  • Expected price growth in February remained at 4.3% on a 3-month basis (it has now been 4.3% or 4.4% for 3 consecutive months). Realised price growth slowed on a 3-month average basis to 5.4% in the 3-months to February from 5.6% in the 3-months to January, 5.9% in the 3-months to December and 6.6% in the 3-months to November. Between June 2022 and October 2023 the survey stayed in a 7.1-8.1% range.
  • In terms of employment growth, the 3-month average of 2.3% of realised employment growth in the 3-months to February was 0.1ppt lower than in January and the lowest since November 2021.
  • Expected employment growth slowed for the first time since September by 0.1ppt to 1.6% in the 3-months to February (it had picked up to 1.7% on the 3-months to January from a trough of 1.2% seen in both September and October 2023).
  • Note that the BOE has been placing an increasing weight on this survey over the past few months - and even more so since the official ONS labour market data started to throw up more issues.