United Kingdom: Labor market shows signs of weakening
According to the statistical office, vacancy numbers declined in the three months to May for the 23nd consecutive three-month period, but were still above pre-pandemic levels. In addition, employment fell for the second straight month in May, while the unemployment rate rose to 4.4% in February–April, the highest rate since 2021. More positively, at over 5% year on year in April, wage growth continued to outpace inflation, pointing to improving consumer purchasing power.
Our Consensus is for the unemployment rate to remain slightly above 4% in the coming quarters, thus staying slightly below the G7 average.
Providing a caveat to the latest data, ING’s James Smith said:
“The UK jobs market is cooling quite noticeably now […] The latest hiring figures tend to back that up, though of course there are still major question marks surrounding the quality of the data. Taken at face value, the rise in the unemployment rate from 3.8% at the end of last year to 4.4% now is pretty eye-catching. But the very pronounced fall in the response rate to the Labour Force Survey and potential bias in the achieved sample means it is still hard to know how seriously to take these latest numbers.”