Key events

ONS: Seeing tentative signs that the jobs market is cooling

Today’s labour market report shows some signs tht the jobs market is cooling, say ONS director of economic statistics Liz McKeown:

“We continue to see tentative signs that the jobs market is cooling, with both employment from our household survey and the number of workers on payroll showing falls in the latest periods.

“At the same time the steady decline in the number of job vacancies has continued for a twenty-second consecutive month, although numbers remain above pre-pandemic levels. With unemployment also increasing, the number of unemployed people per vacancy has continued to rise, approaching levels seen before the onset of COVID-19.

“Earnings growth in cash terms remains high, with the recent falls in the rate now levelling off while, with inflation falling, real pay growth remains at its highest level in well over two years.”

Introduction: UK unemployment rate rises, but wages still strong

Good morning, and welcome to our rolling coverage of business, the financial markets and the world economy.

Britain’s unemployment rate has risen as companies cut back on hiring, and more people drop out of the labour market, often due to ill health.

The latest UK labour market statistics, just released this morning, show that the jobless rate has risen to 4.3% in the first quarter of this year, up from 4.2% a month ago and 3.8% in the previous quarter.

That’s the highest unemployment rate in nearly a year, since March-May 2023.

Another 166,000 people become unemployed in the quarter, taking the total out of work and looking for a job to 1.486m.

The number of people in employment dropped by 178,000 – another signal that the labour market is cooling – taking the total in work to just below 33 million.

Vacancies fell too: down by 26,000 in the three months to April, to 898,000.

In another worrying sign, the UK’s economic inactivity rate jumped to 22.1% in January to March, up from 21.9% in the final three months of 2023. That highlights the rise in people leaving the workforce – perhaps for illness, or due to caring responsibilities.

We’ve published the latest UK labour market figures.

Headline indicators for the UK labour market for January to March 2024 show:

· employment was 74.5%
· unemployment was 4.3%
· economic inactivity was 22.1%

Read Labour market overview ➡️

— Office for National Statistics (ONS) (@ONS) May 14, 2024

But pay growth remained strong – which may disappoint the Bank of England as it looks for signs that inflationary pressures are easing.

Regular earnings (excluding bonuses) rose by 6.0% in the last year, while total pay (including bonuses) rose 5.7% – with both readings unchanged compared with last month.

This means that real wages continue to grow, with earnings rising faster than CPI inflation.

The ONS says:

Using CPI real earnings, in January to March 2024, total pay was 2.1%. Growth was last higher in July to September 2021, when it was 3.0%.

Regular pay was 2.4%; growth was last higher in June to August 2021, when it was 3.4%.

Also coming up today

Later this morning we’ll hear from BoE chief economist Huw Pill, one of the monetary policy committee members who voted to leave interest rates on hold last week.

UK farmers are heading to Downing Street to meet PM Rishi Sunak for the second Farm to Fork summit, to discuss the challenges in the farming industry.

Global investors are bracing for the latest US Producer Price Index (PPI) data, which will show how quickly America’s manufacturers and services companies raised their prices last month.

The PPI report could reinforce, or ease, concerns that US inflation is looking sticks.

Stephen Innes, managing partner at SPI Asset Management, explains:

If this month’s PPI data doesn’t show a decline, there is potential for rates to drift higher, which could lead to a slide in stocks.

And in Miami, mining executives have gathered for the Bank of America Global Metals, Mining & Steel Conference 2024. That includes the CEOs of BHP Group and Anglo American, who are locked in a takeaover tussle after Anglo rejected BHP’s second takeover bid.

The agenda

  • 7am BST: UK labour market report

  • 8.30am BST: Bank of England chief economist Huw Pill speaks at the Institute of Chartered Accountants in England and Wales Regions economic summit

  • 9.30am BST: UK productivity estimates for Q1 2024

  • 10am BST: ZEW institute index of eurozone economic sentiment

  • 11am BST: NFIB index of small business optimism

  • 1.30pm BST: US PPI index of producer price inflation

  • 3pm BST: Fed chair Jerome Powell speaks at the Foreign Bankers’ Association AGM in Amsterdam

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