MNI 5 THINGS: Large UK Employment Gain Expected in Dec Data

--5 Things To Look For When UK December Labour Report Released

--UK December UK Labour Market Data Due For Release Feb 21

     LONDON (MNI) - The latest UK jobs market health-check will be released

Wednesday, when we learn if there were any signs of changes to key metrics. The

MNI median expectations, taken from a poll of analysts, looks for an unchanged

jobless rate of 4.3% alongside a moderation in total earnings growth to 2.4% 3m

y/y.

                    Dec             Dec             Dec                      Dec

             Employment    Unemployment      Avg Weekly      Avg Weekly Earnings

                 Change            Rate        Earnings               Ex-Bonuses

            3m/3m '000s            3m %        3m % Y/Y                 3m % Y/Y

--------------------------------------------------------------------------------

MNI

Median             +180            +4.3            +2.4                     +2.4

Prior              +102            +4.3            +2.5                     +2.4

     Ahead of the release, we outline five themes for particular attention.

     Sep, Oct Softening Transitory? 

     Suggestions of a softening in the labour market after two straight declines

in the employment level in September and October were partially rebuffed after a

sizeable bounce back in November. The employment level dropped by 14,000 and

56,000 in the three months to October and September respectively, the first time

it had dropped two months in a row since the three months to May and June 2015,

but was corrected for by November's solid 102,000 gain, the largest rise since

the three months to June 2017. In the eyes of analysts, data and survey evidence

suggest December's employment result will extend that of November's and it seems

we look set for another bullish improvement. The MNI median is for a gain of

180,000 with the contributing forecasts ranging from 120,000 to as high as

250,000.

     Hours Worked Fell in November. 

     Against the backdrop of November's rise in employment was a decline in the

number of hours worked which, if persisting, could be consistent with a pickup

in productivity. Total weekly hours were down 0.5% in the three months to

November compared to the three months to August. An increase in productivity

would in turn offset any increase in unit labour costs, output per unit of

labour, a key source domestically generated inflation and something the Bank of

England is known to keep a close eye on.

     Wage growth set to dip in December. 

     Nominal wages grew an impressive 2.8% in September on a single-month basis,

courtesy of a 19.6% y/y rise in bonuses, the joint-highest single-month growth

rate since November 2016. However, this will fade out of the calculation for the

headline December number (3m y/y), so a fall-back in the rate from 2.5% to 2.4%,

as analysts predict, seems almost certain. The single-month rate receded to 2.4%

and 2.3% in October and November respectively, meaning weekly earnings would

have to have grown by 2.7% in December to remain fixed at 2.5% 3m y/y. Over the

course of 2018, however, the general trajectory for earnings growth is up, as

discussed below.

     Recruitment Difficulties and Demand Support Wages Growth. 

     Though the XpertHR December survey reported median pay awards still at 2%

the report did allude to early signs of upside pressure starting to appear in

January. Other surveys, like the BOE Agents Report, reported a growing concern

of recruitment difficulties with labour shortages starting to develop across all

sectors and skill levels. The report highlighted a non-significant rise in pay

growth but did relay expectations for pay awards expected to increase to

2.5%-3.5% over 2018 from 2%-3% in 2017. The December IHS Markit/REC Report on

Jobs, which focuses on data provided by recruitment consultancies, suggested a

moderation in staff demand but this was offset by a continued fall in staff

availability and growth in the starting salaries of both temporary and permanent

workers.

     Could the Unemployment Rate Fall Further? 

     Of the 13 analysts whose estimated contributed to the MNI median, two saw

the jobless rate ticking down to 4.2% in December (the other eleven saw it fixed

at 4.3%). A fall to 4.2% would take the rate below the Bank of England's newly

revised estimate of the equilibrium jobless rate which it edged down from 4.5%

to 4.25% and would provide further evidence that the labour market is operating

at near-full capacity. To two decimal places, and on a non-overlapping basis,

the unemployment rate dropped from 4.46% in May to 4.30% in August and 4.28% in

November.

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

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