MNI UK Labour Market Insight: March 2024 Release

• Relative to the sellside previews that we read the labour market data has softened more than expected, but remains tight overall.
• There was a 0.2ppt downside surprise to private regular AWE (at 6.1%Y/Y in the 3-months to January, down from 6.2% in the 3-months to December) and a 0.1ppt downside surprise to total regular AWE (6.1% in the 3-months to January from 6.2% in the 3-months to December).
• The unemployment rate was 0.1ppt higher than expected, increasing 0.1ppt to 3.9%. This was also the first increase since the 3-months to July 2023. Vacancies also fell further to 908k in the 3-months to February, a 43k fall in the last 3-months to the lowest since the 3-months to June 2021.
• We look in more detail at the single month wage data as well as wage momentum data.
• After last month’s labour and inflation data we noted that we thought the probability of first cut in May was around 15% (markets price a negligible chance), we saw a 30% probability of a first cut in June (markets price around 48%), a 40% probability of a first cut in August (markets fully price this with a cumulative -27.4bp at writing) and a 15% probability of the first cut being delayed further. Of course, we still have next week’s inflation data ahead of the MPC’s March decision which could change this view once more, but we remain comfortable with this view following today’s slightly softer-than-expected data.

For the full document see:

MNI UK Labour Insight -March 2024 Release.pdf