UK Preliminary Data Forecasts: July Unemployment Data

By Jamie Satchithanantham

     LONDON (MNI) - Despite the sluggish, insipid growth the UK economy has

generated in the opening half of 2017, the labour market has largely held up

well and has grown in strength. 

     In June the 125,000 new workers, primarily full-time roles, added to the

labour market was enough to push the unemployment rate to 4.4%; this, 0.1pp

below the Bank of England's Monetary Policy Committee's estimate of the U* or

the equilibrium unemployment rate.

     Such is the momentum that the labour market has fostered in recent months,

some analysts polled in an MNI survey even see the jobless rate falling to a

fresh low of 4.3%. 

     While two hold this view (Investec, Oxford Economics), the other eight

polled expect the rate to hold firm at 4.4%, equal to median of the analysts'

forecasts. 

     One area that remains a puzzle is wage growth. Despite the tightening in

the labour market and apparent reduction in slack, wage growth remains firmly

rooted in the 1.8%-2.2% range, running below the headline rate of inflation.

Consequently, real incomes eroded and consumer spending softened.  

     There are tentative signs modest growth may be stirring. On an ex-bonus and

total basis wage growth rise to 2.1% in June and it is expected to have pushed

higher in July. Total wage growth is pencilled 0.3pp higher at 2.4% 3m y/y while

ex-bonus growth is expected to move 0.1pp higher to 2.2% 3m y/y. 

     The most recent labour market, which surveys recruitment consultants across

the country, survey run by The Recruitment and Employment Confederation/Markit

reported evidence of firms bidding higher wages in order to secure workers amid

a high competition and an acute shortage of adequate candidates.

     The permanent pay growth component of the survey rose for the fourth

consecutive month, up 0.9 points to 61.5 in August. This materialised as the

Availability Of Staff indicator remained deep in contractionary territory (35.7)

and the Jobs Vacancies Index rose to a 25-month high (65.1).  

---------------------------------------------------------------

                                                            Jul

                           Jul                Jul           ILO

                    Avg Weekly         Avg Weekly  Unemployment

                      Earnings  Earnings ex-Bonus          rate

                      3m % YoY           3m % YoY          3m %

Date Out                13-Sep             13-Sep        13-Sep

Median                     2.4                2.2           4.4

Forecast High              2.5                2.3           4.4

Forecast Low               2.3                2.1           4.3

Standard Deviation         0.1                0.1           0.0

Count                        8                  8            10

Prior                      2.1                2.1           4.4

Berenberg                  N/A                2.2           4.4

Commerzbank                2.5                N/A           4.4

HSBC                       2.3                2.2           4.4

Investec                   2.4                N/A           4.3

Nomura                     2.4                2.1           4.4

Oxford Economics           2.4                2.3           4.3

RBC                        2.3                2.1           4.4

Scotia                     2.4                2.2           4.4

Standard Chartered         N/A                2.2           4.4

UniCredit                  2.3                2.2           4.4

     The survey will be updated Sep 11.

--MNI London Bureau; +44 203-586-2226; email: jamie.satchithanantham@marketnews.com

[TOPICS: MTABLE,MABDT$,M$B$$$,M$E$$$]