UPDATE: UK Data Forecasts - July Unemployment Data

By Jamie Satchithanantham

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

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

well and 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 17 polled

expect the rate to hold firm at 4.4%. The solid gains in employment are not

expected to have tapered in July. After adding 125k t the workforce, analysts

estimate another 140k will have joined in August. 

     One area that does remain a puzzle, however, 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, eroding real incomes eroded and household spending appetites.

     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.

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

                                                          Jul

                         Jul                Jul           ILO                Jul

                         Avg

                      Weekly         Avg Weekly  Unemployment  Employment Change

                    Earnings  Earnings ex-Bonus          rate              3m/3m

                    3m % YoY           3m % YoY          3m %              '000s

Date Out              13-Sep             13-Sep        13-Sep             13-Sep

Median                   2.4                2.2           4.4              140.0

Forecast High            2.5                2.3           4.4              300.0

Forecast Low             2.3                2.1           4.3               90.0

Standard

Deviation                0.1                0.1           0.0               74.5

Count                     16                 17            19                  6

Prior                    2.1                2.1           4.4              125.0

Barclays                 2.3                2.1           4.4                N/A

Berenberg                N/A                2.2           4.4                N/A

BofAML                   2.3                2.1           4.4              160.0

Capital Economics        2.3                2.2           4.4              140.0

Credit Suisse            N/A                2.1           4.4                N/A

Commerzbank              2.5                N/A           4.4                N/A

Daiwa                    2.3                2.1           4.4                N/A

HSBC                     2.3                2.2           4.4                N/A

Investec                 2.4                N/A           4.3                N/A

JP Morgan                2.4                2.2           4.4               90.0

Lloyds TSB               2.4                2.2           N/A              300.0

Natixis                  2.4                2.1           4.4                N/A

Nomura                   2.4                2.1           4.4                N/A

Oxford Economics         2.4                2.3           4.3                N/A

Pantheon                 N/A                N/A           4.4                N/A

RBC                      2.3                2.1           4.4                N/A

Scotia                   2.4                2.2           4.4              140.0

Stan Chart               N/A                2.2           4.4                N/A

Societe Generale         2.3                2.2           4.4                N/A

UniCredit                2.3                2.2           4.4              110.0

     The most recent Recruitment and Employment Confederation/Markit labour

market report, which polls recruitment consultants across the country, 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).

     Elsewhere, the employment component of the IHS Markit Service PMI to its

highest level for a year-and-a-half, keeping the pace of job creation elevated. 

     The survey's sister manufacturing survey also recorded businesses as having

a bullish outlook on employment. Staffing levels were up for the twelfth

straight month with the pace of expansion among the best over the over past

three years, said Markit.        

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

--MNI London Bureau; tel: +44 203-586-2225; email: les.commons@marketnews.com

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