Flash PMIs Imply Onset of Cooling Labour Demand

Despite deteriorating demand and slowing output, employment indicators remained robust underpinned by service sector employment. However, Germany, the euro area aggregate and the UK signalled the onset of a cooling labour market.

• Slowing hires reflect uncertainty about persistent inflation and the health of the greater economy. A robust labour market is a key supporting factor for resilience against large rate hikes.
• Germany saw employment growth slow to a February 2021 Omicron low.
• The eurozone aggregate experienced largely unchanged employment growth, remaining subdued at the August 17-month slowdown.
• The UK again saw solid employment growth expansion, however, the pace was also in line with 17-month lows of August. Strength was underpinned by the services sector and labour shortages were cited.
• France was a key outlier, recording strong employment growth as job creation rates were the highest in three months. A disparity between service and manufacturing job growth was highlighted, the latter being substantially softer.
• The September flash PMIs were another difficult set of data for central bankers, underlining growth slowing sharply but price pressures picking up again.