MNI 5 Things: June Set For Robust UK Employment and Earnings

Repeats Story Initially Transmitted at 14:05 GMT Aug 10/10:05 EST Aug 10

     LONDON (MNI) - The Office for National Statistics (ONS) is due to release

UK unemployment and earnings data for the month of June on Tuesday. Below are

five things worth noting ahead of the release.

     --Analysts tend to overestimate June unemployment: 

     In the last sixteen years, analysts have tended to slightly overestimate

unemployment for the month of June, by an average of 0.02 pp over this period.

Moreover, four out of the six overestimates since 2002 have come in the last

five years, suggesting that the tendency to overestimate June unemployment has

become more prevalent recently.

     --UK Underemployment Trending Downwards: 

     Since the beginning of 2014, the percentage of part-time workers unable to

find full-time jobs has been trending downwards, whilst vacancies have been on

an upward trend. These factors support the argument of little to no slack in the

economy, which is also a reoccurring theme highlighted by the recent REC jobs

survey data. In terms of the most recent hard data, vacancies rose in the second

quarter of 2018, suggesting that the share of part-time workers unable to find

full-time jobs may also continue its downward trend.

     --Latest Survey Data Point to Employment Consolidating: 

     The June IHS Markit/REC Report on Jobs survey indicated that whilst growth

in the demand for permanent staff edged up to a seven-month high, candidate

availability deteriorated at a steeper pace. Consequently, the growth in staff

appointments was hampered, with permanent staff placements and temporary

billings growing at eight and three-month lows respectively. However, both have

continued to rise sharply and permanent staff appointments have now risen for

the past twenty-three months consecutively.

     --Analysts Don't Sufficiently Account For Bonuses in June: 

     Since 2010, analysts have underestimated June headline earnings by an

average of 0.08pp. In contrast, core earnings have been overestimated by an

average of 0.09 pp. However, these averages appear to be heavily skewed by 2010,

when the magnitudes of the analysts' misses were unusually large (with headline

earnings having been underestimated by 0.5pp and core earnings overestimated by

0.3pp). Excluding 2010, the average underestimate of headline earnings over the

period is a much smaller 0.01pp while the average overestimate of core earnings

is slightly lower at 0.06pp.

     --BOE Lowers Earnings and Unemployment Projections In August Inflation

Report: 

     In its August inflation report, the Bank of England has downwardly revised

its four-quarter Average Weekly Earnings (AWE) growth projection from May.

Initially, the projection was at 2.75%, but it is now anticipated to be at 2.5%.

However, the forecasts for 2019 and 2020 were unchanged from 3.25% and 3.5%

respectively.

--MNI London Bureau; tel: +44 203-586-2225; email: les.commons@marketnews.com