MNI DATA ANALYSIS: UK Employment Slows as Wages Pick Up>

-UK May-July Employment +3,000; employment rate falls to 75.5% 

-UK May-July Total Earnings +2.6% 3m/year-ago vs +2.4% April-Jun

     By Laurie Laird and Jamie Satchi 

     London (MNI) - UK employment growth slowed markedly in the three 

months to July, with the inactivity rate rising sharply, even as wages 

accelerated to a pace well in excess of economists' expectations. 

     Employment rose by 3,000 to 32.40 million, after increase of 42,000 

in the second quarter, below the MNI median forecast of a 5,200 gain. 

That's the smallest three month gain since the three months to October 

of 2017, pushing the employment rate down to 75.5% from 75.6% in the 

second quarter. 

     Unemployment declined by 55,000 in the three months to July, to 

1.36 million, despite a sharp rise in the inactivity rate to 21.2%. 

Inactivity jumped by 0.3 percentage points over the February to April 

period, the joint-largest rise since the first quarter of January of 

1992. 

     Joblessness, as measured by the Labour Force Survey, steadied at 

4.0% in May to July period, unchanged from the second quarter, in line 

with the MNI median forecast, matching the lowest rate since the three 

months to February of 1975. 

     The outturn also matched the 4.0% jobless rate forecast of Bank of 

England staff for the second quarter, as published in the August 

Quarterly Inflation report. 

     Despite the slowdown in employment growth, May-to-July wages, at 

long last, showed signs of acceleration long awaited by the Bank's 

Monetary Policy Committee. 

     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 2.6% in the 

three months to July, above the MNI median forecast of 2.4%, up from a 

2.4% gain in the previous three months. 

     With inflation rising to an annual rate of 2.5% in July, real 

wages, including bonuses, rose by 0.2% in the latest period, up from 

0.1% in the second quarter. Over the month of July, real regular wages 

jumped by an annual rate of 0.8%, the fastest pace since November of 

2016, although an ONS official cautioned that wage growth in July of 

2017 was unusually weak, providing a low base for comparison. 

     The Office for National Statistics uses the CPIH measure to 

discount nominal wages, which hit an annual rate of 2.3% in May, or 0.2 

percentage points below the price measure targeted by the Bank of 

England. When discounted by CPI, real total wage growth rose by just 

0.1% in the three months to July, according to a National Statistics 

official. 

     Excluding bonuses, regular earnings, before adjusting for 

inflation, improved by an annual pace of 2.9% in the latest three-month 

period, above the MNI median of a 2.8% gain, up from 2.7% in the 

previous period. 

     However, job vacancies jumped by another 14,000 in the three months 

to July to 833,000, the highest since records began in 2001, which could 

support the Bank's expectation of further wage growth acceleration in 

months to come. 

     The jobless rate rose to 4.1% in the month of July, according to 

experimental data, from 4.0% in June. 

     The more up-to-date claimant count rose by 8,700 in August, leaving 

the associated unemployment rate at 2.6%, up from 2.5% in July. 

     The claimant count for July was revised to show a 10,200 rise, 

compared to the 6,2000 increase reported last month. 

-London bureau: 44 (0) 203 865 3812; email: ukeditorial@marketnews.com

[TOPICS: M$B$$$,MABDS$]