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Labour Market Data Indicate Labour Market Tightened More in the Previous Quarter

UK DATA
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  • ONS: "The reweighted estimates suggest that over the last five months, though the employment rate has remained broadly flat, the unemployment rate may have fallen, offset by an increase in the rate of economic inactivity; however, some uncertainty remains in these estimates."
  • The latest estimate for unemployment is now 3.9% in the 3-months to November. This is down 0.3ppt from the 4.2% that had previously been expected.
  • The new data has fallen from a peak of 4.3% in the 3-months to July. Whereas the ONS' previous estimates based on alternative data had the unemployment rate broadly stable.
  • Employment is 75.0% in the 3-months to November (up 0.3ppt on the quarter). So the level is lower than the alternative previous estimate (which was 75.8%) but the change has seen employment grow faster (previously +0.1ppt on the quarter).
  • At first glance, these data it appears that the labour market tightened more than expected, particularly over the last quarter.
  • It's still hard to really know how much weight to place on them, but taken at face value they would support the MPC keeping rates higher for a bit longer.
  • Note that Broadbent had said a few months ago that despite the issues with the ONS data, that the official data is still more important than the survey data. But that the BOE looks at a range of indicators when assessing labour market tightness.
  • TLFS data is now due to be released in September 2024 (rather than H1). So based on most analyst (and market) expectations - too late for the BOE to decide when to first cut.
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  • ONS: "The reweighted estimates suggest that over the last five months, though the employment rate has remained broadly flat, the unemployment rate may have fallen, offset by an increase in the rate of economic inactivity; however, some uncertainty remains in these estimates."
  • The latest estimate for unemployment is now 3.9% in the 3-months to November. This is down 0.3ppt from the 4.2% that had previously been expected.
  • The new data has fallen from a peak of 4.3% in the 3-months to July. Whereas the ONS' previous estimates based on alternative data had the unemployment rate broadly stable.
  • Employment is 75.0% in the 3-months to November (up 0.3ppt on the quarter). So the level is lower than the alternative previous estimate (which was 75.8%) but the change has seen employment grow faster (previously +0.1ppt on the quarter).
  • At first glance, these data it appears that the labour market tightened more than expected, particularly over the last quarter.
  • It's still hard to really know how much weight to place on them, but taken at face value they would support the MPC keeping rates higher for a bit longer.
  • Note that Broadbent had said a few months ago that despite the issues with the ONS data, that the official data is still more important than the survey data. But that the BOE looks at a range of indicators when assessing labour market tightness.
  • TLFS data is now due to be released in September 2024 (rather than H1). So based on most analyst (and market) expectations - too late for the BOE to decide when to first cut.