MNI DATA ANALYSIS: UK Mar-May Wages Slow; Employment Up>

-UK Mar-May Total Earnings +2.5% 3m/year-ago vs +2.6% Feb-April

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

-UK Mar-May LFS Unemployment Rate 4.2% vs 4.2% Feb-April

-UK Mar-May Employment +137,000; employment rate record 75.7% Feb-April

By Laurie Laird and Jamie Satchithanantham

     London (MNI) - UK earnings growth slowed modestly in the three 

months to May, even as employment growth soared, as the hot jobs market 

enticed adults back to the work force. 

     Employment rose by 137,000 to 32.40 million, after increase of 

146,000 between February and April, above the MNI median forecast of a 

97,000 gain.  That's the third straight three-month period of gains in 

excess of 100,000, according to a National Statistics official. That 

took the employment rate to a record-high 75.7%.  

     Unemployment declined by 12,000 in the three months to May, to 1.41 

million, as inactivity decreased by 86,000 to 8.64 million, taking the 

inactivity rate to a joint-record-low of 21.0%. More than half of those 

returning to the work force had been economically inactive while looking 

after homes and families. 

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

4.2% in the three months to May, in line with the MNI median forecast, 

matching the lowest rate since the thee months to April of 1975. 

     The outturn failed to reach the 4.1% jobless rate forecast of Bank 

of England staff for the three months to May, as published in the May 

Quarterly Inflation report. 

     And an meaningful upturn in wages, long-awaited by the Bank's 

Monetary Policy Committee, failed to materialise. According to minutes 

of the Bank's June rate-setting meeting, MPC members noted that "most 

indicators of pay growth have picked up over the past year and the 

labour market remains tight, suggesting that domestic cost pressures 

will continue to firm gradually." 

     Total weekly earnings increased by an annual pace of 2.5% in the 

three months to May, matching the MNI median forecast, down from a 

revised 2.6% gain in the previous three months. 

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

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

the February-to-April outturn. However real wages have not fallen 

since the fourth quarter of 2017. 

     The Office for National Statistics uses the CPIH measure to 

discount nominal wages, which rose to an annual rate of 2.3% in May, but 

remained 0.1 percentage point below the price measure targeted by the 

Bank of England. When discounted by CPI, real total wage growth remained 

in a range of no change to a 0.1% increase, according to a National 

Statistics official. 

     Moderation of bonus payments kept total wage growth in check, with 

bonuses rising by an annual rate of just 0.2% in the three months to 

May, the smallest increase since October of 2016. In the month of May, 

bonus payments slumped by an annual rate of 0.8%, the sharpest fall 

since July of 2017. 

     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, down from 2.8% in the previous 

period. 

     Price-adjusted regular earnings growth, discounted by CPIH,  rose 

by 0.4% over the same period a year earlier, down from a 0.5% gain in 

the previous period. When discounted by CPI, real earnings grew by 

between 0.2% and 0.3%, according to the official. 

     Job vacancies increased by 7,000 in the three months to May, 

hitting 824,000, the highest since records began in 2001. 

     The jobless rate fell to 4.0% in the month of May, according to 

experimental data, from 4.2% in April. 

     The more up-to-date claimant count rose by 7,800 in June, 

leaving the associated unemployment rate at 2.5%, unchanged from May.

     The claimant count for May was revised to show a 3,000 fall, 

compared to the 7,700 decline reported last month. 

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

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