UK Employment Data October: Strong Data, Outlook Less Assured

We are told a strong set of employment and earnings figures suggest the Bank of England would struggle to justify a November interest rate cut at the Bank of England but other commentators warn the outlook is turning increasingly sour.

October's official release of UK employment statistics for August and September has come in largely in line with analyst expectations but with a slightly better-than-expected bias.

The Pound edged higher as it was reported that UK employees continue to see their pay packets grow while unemployment remains steady.

However, there are mixed views as to what the outlook for this crucial economic cog holds.

The headline numbers:

• The Unemployment rate (Aug): 4.9% as expected
• Average Earnings ex Bonus (Aug): 2.3% vs 2.1% forecast
• Average Earnings Index +Bonus (Aug): 2.3% vs 2.3% forecast but the previous month’s reading was upgraded to 2.4%.
• Claimant Count Change (this is for September): 0.7K vs 3K expected.

“The timeliest information in the report, the claimant count measure of unemployment for September… suggests that next month’s official figures will continue to show a very low level of unemployment,” reads a note from Lloyds Bank Commercial Banking to clients following the data release.

Chris Beauchamp at IG says the Bank of England will struggle to justify another interest rate cut in October on the back of the data:

“UK unemployment data has helped the pound to move steadily higher this morning, as sterling buyers continue to creep out from the post-flash crash shelters. The resilience of UK economic data continues to surprise, and means that very real questions now hover over the Bank of England.

“With sterling-weakness tailwinds apparently driving Britain forward, the bar for a BoE rate cut seems to be getting higher every day.”

However, Mariano Mamertino, economist at the world's biggest job site, Indeed, warns the outlook is uncertain:

“Overall levels of employment remain reassuringly robust, but employers’ desire to take on new staff has cooled sharply in the wake of the Brexit vote.

“The latest data from the Indeed Industry Employment Trends report shows that in the three months following the referendum, the number of vacancies fell in 11 out of 13 recruitment sectors.

“The full impact of Brexit has yet to fully filter through to the number of people in work. But with the jobs market pausing for breath and many employers putting recruitment on hold, it is far from business as usual. For now the uneasy calm continues, but it is far from clear how long it can continue to do so.”