MNI: 5 Things To Look For: UK Labour Data

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