MNI DATA ANALYSIS: UK Q1 Wages Sluggish; Productivity Slumps>

-UK Jan-Mar Total Earnings +2.6% 3m/year-ago vs +2.8% Dec-Feb

-UK Jan-Mar Regular Earnings +2.9% 3m/year-ago vs +2.8% Dec-Feb

-UK Jan-Mar LFS Unemployment Rate 4.2% vs 4.2% Dec-Feb

-UK Jan-Mar Employment +197,000; employment rate 75.6% Dec-Feb

-UK Q1 Productivity -0.5% q/q vs +0.7% Q4, +1.0% Q3

     By Laurie Laird and Jamie Satchithanantham 

     London (MNI) - UK earnings growth slowed in the first quarter, 

dampened by a fall in bonus payments, even as employment soared, leading 

to a downturn in productivity. 

     Employment leapt by 197,000 to 32.34 million, after increase of 

55,000 between December and February, well above the MNI median forecast 

of a 115,000 gain. That's the biggest rise in employment since the 

fourth quarter of 2015, and lifted the employment rate to a record-high 

75.6%. 

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

4.2% in the first quarter, in line with the MNI median forecast, 

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

     Unemployment declined by 46,000 in the three months to March, to 

1.42 million, as inactivity decreased by 115,000 to 8.66 million, taking 

the inactivity rate to a record-low 21.0%. Almost half those returning 

to the work force were previously looking after family or the home. 

     The unemployment outturn matched the 4.2% jobless rate forecast of 

Bank of England staff for the first quarter, as published in the May 

Quarterly Inflation report. 

     But evidence of an upturn in wages, long-awaited by the Bank's 

Monetary Policy Committee, is somewhat scand.  According to minutes of 

the Bank's May rate-setting meeting, MPC members noted that a "range of 

survey indicators suggest pay growth will rise further in response to 

the tightening labour market." 

     Total weekly earnings increased by an annual pace of 2.6% in the 

three months to March, below the MNI median forecast of 2.7%, down from 

a 2.8% gain in the previous three months. 

     That left real wages unchanged in the first quarter, down from a 

0.2% gain in the three months to February, even as inflation receded in 

March. 

     The Office for National Statistics uses the CPIH measure to 

discount nominal wages, which slid to an annual rate of 2.3% in March, 

0.2 percentage points below the CPI measure targeted by the Bank of 

England. When discounted by CPI, real wages fell by approximately 0.1%, 

according to a National Statistics official. 

     However, bonus payments rose by an annual rate of just 1.2% in the 

first quarter, the slowest pace since the three months to May of 2017, 

dampening the growth in total pay.  

     Excluding bonuses, regular earnings, before adjusting for 

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

period, matching the MNI median of a 2.9%, the strongest growth since 

the three months to January of 2015, up from 2.8% in the previous 

period. 

     Price-adjusted regular earnings increased by 0.4%, the best showing 

since the three months to January of 2017. Discounted by the CPI, wages 

increased by approximately 0.2%, according to a National Statistics 

official. 

     Job vacancies fell by 16,000 in the first quarter to 806.000, the 

first decline since the three months to July of 2017. 

     That raises questions over the Bank of England's optimism that 

wage growth will continue to accelerate, especially as employment 

continues to grow, hampering productivity. 

     Productivity slumped by 0.5% in the first quarter, according to a 

flash estimate released by the Office for National Statistics, after a 

0.7% increase in the closing quarter of 2017 and a 1.0% jump in the 

previous three months, the best productivity growth since the financial 

crisis.  

     The jobless rate jumped to 4.4% in the month of March, according to 

experimental data, from 4.0% in February. 

     The more up-to-date claimant count surged by 31,200 in April, the 

biggest rise since July of 2011, although the historical figures 

pre-date the introduction of Universal Credit in 2013. The sharp rise   

lifted the associated unemployment rate to 2.5%, from 2.4% in February. 

     The claimant count for March was revised to show a 15,700 rise, 

compared to the 11,600 increase reported last month. 

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

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