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Payrolls Jump, Strongest UK Wages Growth Ex Pandemic

MNI (London)

  • Payrolled employees jumped 102k in January, over double that of December and markedly outpacing forecasts of +15k. The inactivity rate fell 0.3pp on the quarter to December, together implying continued labour market tightness.
  • Though historically very high, the quarter to January saw job vacancies decline by 76k, implying the seventh consecutive recorded fall. Firms cited economic pressures as the grounds for lower recruitment levels.
  • December weekly earnings slowed 0.6pp to +5.9% 3m/yoy, whilst accelerating by 0.2pp to +6.7% 3m/yoy when excluding bonuses. This was the strongest wage growth rate on record barring the pandemic period.
  • The BOE stated at the February MPR that both domestic price and wage pressures have outpaced expectations, implying upside risks to core CPI.
  • According to the February MPR, a continuation of this trend would imply an active response in the Bank Rate: "If there were to be evidence of more persistent pressures, then further tightening ... would be required."

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