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MNI: 5 Things To Look For: UK Labour Data

MNI (London)
Repeats Story Initially Transmitted at 16:13 GMT Jan 23/11:13 EST Jan 23
--UK September-November Labour Market Data, Due Jan 24
By Jamie Satchithanantham
     LONDON (MNI) - The UK's Sep-Nov labour data print will be released
Wednesday, when we will learn if new trends in the job market are developing.
The MNI median expectations, taken from a poll of analysts, look for an
unchanged jobless rate of 4.3% and unchanged nominal wage growth of 2.5% 3m y/y.
           Nov Avg Weekly       Nov Avg Weekly                    Nov Employment
           Total Earnings  Ex-Bonuses Earnings  Nov Unemployment          Change
                   3M Y/Y               3M Y/Y            Rate %     3M/3M '000s
--------------------------------------------------------------------------------
MNI
Median               +2.5                 +2.3              +4.3            -20k
Prior                +2.5                 +2.3              +4.3            -56k
     Ahead of the release, we outline five themes for particular attention.
- A softening in the Labour Market? 
     Analysts expect a 20k drop in the number of employees in the labour force
for the period Sep-Nov. This would follow falls of 56,000 and 14,000 in the
three months to October and September respectively. While comparing overlapping
3m/3m periods is not ideal, if another fall was recorded in the November pack it
would constitute the first time we have had three consecutive falls in the
overlapping 3m/3m rate since late 2012/early 2013. On a single month basis, the
average change in the total employment level has averaged 32,020 year-to-date
(Jan-Oct). If the same number joined the workforce in November this would be
consistent with a -42,700 employment change 3m/3m.
-Robust Wage Growth Expected. 
     Probably the most looked-at piece of data in this pack given its
implications for wider monetary policy, analysts expect wage growth to hold pat
at October's levels; +2.5% 3m y/y (total) and +2.3% 3m y/y (ex-bonuses). For
headline earnings growth to stay fixed at 2.5% 3m y/y in November, this would be
consistent with total wages rising by 2.4% m/m in November. Single month wage
growth came in at 2.4% or more on 5 occasions in 2017 with the average monthly
growth rate at 2.2% (consistent with 2.4% 3m y// total earnings growth).
September's 19.7% m/m rise in bonus payments will remain in the three-month
calculation and thus should continue to support wage growth at least in
November. 
-Surveys Convey Mixed Hiring Sentiment. 
     The November CIPS/Markit Services PMI saw job growth increase modestly
after hitting a seven-month low in October with firms citing higher costs and
uncertainty as dragging on their plans to hire. The sector accounts for roughly
80% of UK output. In contrast, sister the manufacturing report highlighted the
16th successive month of higher staffing levels and the highest rate of job
growth since June 2014.
-Wage Growth Skewed to the Upside in 2018.
     The Bank of England's Agents' summary published in November pointed to
modest growth in staffing over the next 6m and attributed the latest increase in
pay growth to recruitment difficulties. The December Q4 Agents' went on to place
average wage growth at around 2.5-3.5% over 2018 up from 2-3% in 2017. With pay
awards traditionally awarded at the start of the calendar year, eyes will be
fixed on data and surveys like the XpertHR pay settlements Report out Jan 25
that offer a gauge of post-New Year earnings.
-Unit Labour Costs Up for the 10th Straight Quarter. 
     ULCs grew by 1.3% y/y in Q3 2017, signalling a bigger rise in per hour
labour costs relative to per hour output (productivity). Though up for the 10th
consecutive month it was the smallest rise since Q2 2015. ULCs are a key
indicator of domestically generated inflation and have been openly seen as a
inflation barometer by the Bank of England.
--MNI London Bureau; tel: +44 203-586-2225; email: les.commons@marketnews.com
--MNI London Bureau; +44 203-586-2226; email: jamie.satchithanantham@marketnews.com
MNI London Bureau | +44 203-865-3812 | les.commons@marketnews.com
MNI London Bureau | +44 203-865-3812 | les.commons@marketnews.com

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