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Single month estimates still point to data in line or slightly above BOE fcasts

UK DATA
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  • Looking a bit more into the private sector AWE single month estimates (which together you need 3 to get the headline numbers and a full stratified random sample): The January single month number came in at 5.8%Y/Y. This is a 4 tenth reduction from the 6.2%Y/Y single month estimate from this cohort in October. There are minimal revisions to the November and December single month prints (which still round to 6.3%Y/Y and 6.2%Y/Y respectively.
  • If we were to see similar 0.4ppt falls in the single month estimates for both February and March (with no revision to today's January print), then we would see private sector regular AWE for Q1 come in at 5.8%Y/Y. This would be a tenth higher than the 5.7%Y/Y the BOE forecast in its February MPR.
  • So although today's wage data was softer than sellside expectations, it's hard to really interpret it as a downside surprise to the Bank's forecasts at this point. "Encouraging" is probably a better word.
  • But do of course bear in mind that the Bank didn't explicitly say that there needed to be downward surprises to data in order to start the cutting cycle.
  • Overall, at first glance, it still feels as though the data can't weaken enough in one more print to see a May cut come into play here. There still feels a risk of a June cut (with 3 more prints of this data after today), but to us it still feels as though August looks the most likely starting point for the easing cycle.
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  • Looking a bit more into the private sector AWE single month estimates (which together you need 3 to get the headline numbers and a full stratified random sample): The January single month number came in at 5.8%Y/Y. This is a 4 tenth reduction from the 6.2%Y/Y single month estimate from this cohort in October. There are minimal revisions to the November and December single month prints (which still round to 6.3%Y/Y and 6.2%Y/Y respectively.
  • If we were to see similar 0.4ppt falls in the single month estimates for both February and March (with no revision to today's January print), then we would see private sector regular AWE for Q1 come in at 5.8%Y/Y. This would be a tenth higher than the 5.7%Y/Y the BOE forecast in its February MPR.
  • So although today's wage data was softer than sellside expectations, it's hard to really interpret it as a downside surprise to the Bank's forecasts at this point. "Encouraging" is probably a better word.
  • But do of course bear in mind that the Bank didn't explicitly say that there needed to be downward surprises to data in order to start the cutting cycle.
  • Overall, at first glance, it still feels as though the data can't weaken enough in one more print to see a May cut come into play here. There still feels a risk of a June cut (with 3 more prints of this data after today), but to us it still feels as though August looks the most likely starting point for the easing cycle.