**MNI 5 THINGS: Mixed Outlook for UK Pay; Productivity Slumps

By Jamie Satchithanantham and Laurie Laird

     **LONDON (MNI) - The following are the key points from the ONS' March

labour market data published Tuesday by the Office for National Statistics.

     - As highlighted by MNI, nominal earnings growth undershot expectations and

weakened in the three months to March. The fall was, as explained, put down to

weaker bonus payments in March 2018 versus March 2017. Ex-bonus, wage growth

rose by 2.95 3m y/y, its fastest pace since the 3m to Jan 2015, suggesting some

momentum in underlying wage growth.

     - Total real wage growth, discounted by CPIH, was flat in the three months

to March. If discounted by CPI, real wages fell 0.1% 3m y/y on a total basis and

grew by just 0.2% 3m y/y on a regular basis, according to an ONS official.

     - Inactivity continued to fall, dropping to a record low of 21.0% on the

quarter in March, lifting employment by a larger-than-expected 197,000. This

trend raises questions about the degree of labour market slack, specifically

whether we have more slack than suggested by a jobless rate of 4.2%.

     - As employment soared productivity slumped by 0.5% q/q, bringing to an end

two consecutive quarters of growth. MNI had previously highlighted how

productivity was artificially high towards the back end of 2017, driven by a

drop in hours worked. Any continued weakness in productivity is likely to hamper

the prospects for wage growth, particularly as job vacancies fell.

     - Vacancies, a more forward looking indicator of employment demand fell,

16,000 in the three months to April. At the same time, the claimant count for

April rose sharply, according to experimental statistics, pushing the claimant

rate up to 2.5% -- its highest rate since November 2014.

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

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