The latest UK labour market report reveals a steady unemployment rate of 4.4% but highlights growing earnings pressures. Regular pay increased by 5.9% YoY, significantly impacting the likelihood of the Bank of England achieving its 2% inflation target. Data quality concerns from the Office for National Statistics cast doubt on these figures' reliability. Policymakers remain cautious about potential National Insurance hikes affecting business stability, influencing their approach to monetary policy. While rate cuts are expected, significant risks and inflationary pressures persist, suggesting a challenging economic landscape ahead for the UK labor market in 2024.
As we head into 2024, the UK labour market shows fragility with unemployment steady but rising earnings pressures, complicating the Bank of England's inflation targets.
Despite an unexpected stability in the unemployment rate at 4.4%, potential issues with data quality cast doubt on the reliability of these labour market figures.
Significant earnings growth, at 5.9% YoY, raises concerns about the ability of the Bank of England to achieve its 2% inflation target.
The outlook indicates the Bank of England will likely continue its pace of rate cuts, while caution is urged due to ongoing inflationary pressures.
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