UK Labor Market Strengthens In January
The UK payroll employment and job vacancies rose to record highs and redundancies were below pre-pandemic levels, signaling the strength of the labor market despite the disruptions caused by the Omicron variant.
Payrolled employees logged a monthly increase of 108,000 in January to a record 29.5 million, the Office for National Statistics said on Tuesday.
The number of job vacancies in November to January rose to a new record of 1,298,400. However, the rate of growth in vacancies continued to slow down.
In January, the number of people claiming unemployment benefits decreased by 31,900 from the previous month. The claimant count held steady at 4.6 percent in January.
The ILO jobless rate came in at 4.1 percent in three months to December, unchanged from three months to November. The rate matched economists’ expectations.
At the same time, the employment rate increased by 0.1 percentage points sequentially to 75.5 percent in the fourth quarter.
The redundancy rate dropped to 2.6 percent in the fourth quarter.
In the fourth quarter, average earnings including bonuses grew 4.3 percent, faster than the expected rate of 3.8 percent. Similarly, excluding bonuses, regular pay was up 3.7 percent compared to the forecast of 3.6 percent.
Employment has recouped the falls after the furlough scheme, the unemployment rate has fallen to preCOVID levels, job vacancies are at a record high and wage growth is rising, Paul Dales, an economist at Capital Economics, said. That is a recipe for more interest rate hikes, perhaps from 0.50 percent now to 1.25 percent this year and to 2.00 percent next year.
The Bank of England looks set to hike rates for a third time in March, and there is nothing much in the latest jobs report that’s likely to change that, James Smith, an ING economist said.
“However, we still doubt that the UK is headed for a wage-price spiral that would justify the six rate hikes markets are now expecting from the BoE this year,” Smith added.
Another report from the ONS showed that the output per hour worked was 2.3 percent above levels recorded prior to the pandemic.
Total hours worked in the economy were unchanged in the fourth quarter, despite the end of the furlough scheme.
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