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UK Jobs Market Weakness: A Mixed Picture Emerging

Strategic Insights

— 1 min read

Economists and investors are eagerly awaiting official data on the UK jobs market, with a mix of gloomy expectations from employers and conflicting signals from recent official statistics. The Bank of England's Monetary Policy Committee is split on whether to focus on job losses or stubborn inflation. Meanwhile, in the US, inflation numbers are set to be released, with concerns about the impact of Donald Trump's firing of the head of the Bureau of Labor Statistics on data quality.

Key Takeaways:

  • The UK jobs market is facing near-universal gloom among employers, citing tariffs, new taxes, labor shortages, and new legislation on workers' rights.
  • Recent official data has been mixed, with tax records pointing to flat or falling payroll employment, while the labor force survey shows a recent pick-up in both employment and unemployment.
  • The Bank of England's Monetary Policy Committee is split on whether to focus on job losses or stubborn inflation.
  • Economists polled by Reuters expect unemployment to remain steady at 4.7 per cent and wage growth to slow to 4.7 per cent in the three months to May.
  • The Reserve Bank of Australia is widely expected to cut its policy interest rate by a quarter of a percentage point, to 3.6 per cent, but a surprise rate hold in July demonstrates the RBA's caution.
  • Australian rate traders have learned to be cautious of the RBA's decision-making, citing the central bank's desire not to make friends with the market.

Statistics:

  • Unemployment rate expected to remain steady at 4.7 per cent (Reuters poll)
  • Wage growth expected to slow to 4.7 per cent in the three months to May (Reuters poll)
  • Reserve Bank of Australia's policy interest rate expected to cut to 3.6 per cent (economic consensus)
  • Annual "trimmed mean" inflation in Australia fell to 2.7 per cent in June, its lowest rate since December 2021
  • US consumer price index expected to rise 0.2 per cent in July (LSEG estimate)

Sources:

  • Reuters
  • LSEG
  • Macquarie Group
  • Goldman Sachs
  • Reserve Bank of Australia
  • Commonwealth Bank
  • Commonwealth Bank of Australia

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