The Guardian
Jobless rate unexpectedly rises to 5% and employment falls by 100,000, biggest drop in six years; economists say June interest rate hike looks less likely Real wages are on the cusp of shrinking for the fourth time in less than two decades, the Resolution Foundation has warned. The latest ONS data shows February’s fall in unemployment was a blip. A sharp rise in March – to 5.5% in the single-month data, the highest since 2015 – returned unemployment to 5% over the first three months of the year. Early indications suggest further bad news in April, with payrolled employment falling by 100,000 on the month (although initial April estimates are always subject to large revisions). The UK labour market entered the current period of economic turbulence in a weak place, with unemployment at five per cent and real wage growth falling to zero. With inflation set to increase over the coming months, the UK is on the cusp of its fourth period of falling real-wage growth in less than two decades. This stuttering performance goes a long way in explaining the political and economic discontent that surrounds modern Britain. The latest UK jobs report, which features rising unemployment, sharply lower payrolls and tumbling wage growth, is a reminder that the economy is much less susceptible to ‘second round’ effects from the incoming energy shock on things like wage growth than it did four years ago in the last oil/gas shock. We’re still forecasting a rate hike in June, but that is far from guaranteed. Following the April Bank of England meeting, we’ve tentatively been forecasting a one-and-done rate hike in June. That remains our base case, mainly because our house view on energy prices, particularly for natural gas, and given that the strait of Hormuz is showing little sign of reopening. But it’s a close call, and we remain open-minded about next month’s meeting. A lot will also depend on tomorrow’s inflation data. Continue reading...
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