MNI DATA ANALYSIS: Bonuses Pull Down on UK Earnings In June

--UK April-Jun Total Earnings +2.4% 3m/year-ago vs +2.5% Mar-May 

--UK April-Jun Regular Earnings +2.7% 3m/year-ago vs +2.7% Mar-May 

--UK April-Jun Real Regular Earnings +0.4% 3m/year-ago vs +0.5% Mar-May 

--UK April-Jun Real Total Earnings +0.1% 3m/year-ago vs +0.2% Mar-May 

--UK April-Jun LFS Unemployment Rate 4.0% vs 4.2% Mar-May 

--UK April-Jun Employment +42,000; employment rate 75.6% Mar-May 

--UK July Claimant Count +6,200 vs revised +9,000 June

By Jamie Satchithanantham and Jai Lakhani

     LONDON (MNI) - UK earnings receded in the second quarter, despite the

employment growth remaining robust and the unemployment rate falling by more

than expected, failing to deliver the sustained wage growth pick up touted by

the Bank of England.

     Employment rose by 42,000 to 32.39 million, after an increase of 137,000

between March and May, below the MNI median forecast of a 100,000 gain. That

snapped a run of three straight three-month periods of gains in excess of

100,000, according to a National Statistics. official.

     That took the employment rate to 75.6%, unchanged on the quarter but higher

than a year earlier when it was 75.1%.

     Unemployment fell by 65,000 in the three months to June, to 1.36 million,

despite a 77,000 increase in the inactivity count, taking the total stock to

8.73 million and the inactivity rate up 0.2pp to 21.2%.

     Joblessness, as measured by the Labour Force Survey, declined to 4.0% in

the first quarter, below the MNI median forecast of 4.1%, down from 4.2% in the

three months to May, matching the lowest rate since the three months to February

of 1975.

     The outturn beat the 4.1% jobless rate forecast of Bank of England staff

for the second quarter, as published in the August Quarterly Inflation report,

and edged further below the Bank's estimate of the equilibrium jobless.

     But an upturn in nominal wages, long-awaited by the Bank's Monetary Policy

Committee, did not materialise in the second quarter.

     According to minutes of the Bank's August rate-setting meeting, MPC members

noted that a number of proximate indicators supported the view that the pay

environment was strengthening further. A special survey by the Agents had

indicated that labour market tightness had spurred employers to increase pay to

key existing staff.

     Total weekly earnings increased by an annual pace of 2.4% in the three

months to June, the slowest rate since the three months to September last year,

below the MNI median forecast of an unchanged 2.5% result.

     With inflation steadying at an annual rate of 2.4% in June, real nominal

wages, including bonuses, grew by 0.1% in the latest period,

     However, the Office for National Statistics uses the CPIH measure to

discount nominal wages, which hit an annual rate of 2.3% in May, or 0.1

percentage point below the price measure targeted by the Bank of England. When

discounted by CPI, real wage growth was flat, according to a National Statistics

official.

     Excluding bonuses, regular earnings, before adjusting for inflation,

improved by an annual pace of 2.7% in the latest three-month period, in line

with the MNI median but down from 2.8% in the previous period.

     The bulk of the weakness in nominal pay growth was attributed to weak bonus

pay which, according to an ONS statistician, has been brought forward this year

compared to normal.

     Bonuses were down 6.6% m/m in June, the biggest monthly fall witnessed in a

month shy of a year.

     Price-adjusted regular earnings, discounted by CPIH, rose by 0.4% over the

same period a year earlier.

     However, job vacancies rose by 20,000 to 829,000 in the three months to

June, the highest since records began in 2001, supporting the Bank of England's

forecast of an accelerating wage growth.

     The jobless rate held firm at 4.0% in the month of June, according to

experimental data.

     The more up-to-date claimant count rose by 6,200 in July, leaving the

associated unemployment rate at 2.5%, unchanged from June.

     The claimant count for June was revised to show a 9,000 rise, compared to

the 7,800 increase reported last month.

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

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