Janus Henderson Investors: UK employment rise no obstacle to rate cut

Schlagworte: , , ,
UK rate cut sceptics argue that a rise of 135.000, or 0.5%, in the number of employees in the three months to November from the prior three months signals a strong labour market and will give MPC doves a reason to climb down.

This increase, however, merely reverses a decline earlier in 2019 – the
November three-month level was unchanged from February. The stock of
vacancies recovered slightly in the three months to December, which
appears to reflect a sharp jump in December alone, but the signal for
employment prospects remains negative – see first chart.

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UK-employment-rise-no-obstacle-to-rate-cut_chart01

MPC members may be more impressed by confirmation that private sector earnings growth has peaked – second chart.

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UK-employment-rise-no-obstacle-to-rate-cut_chart02

The labour force survey measure of unemployment has moved sideways since
early 2019 but the “experimental” alternative claimant count, which
attempts to track the number of jobless benefit recipients by adjusting
for the roll-out of universal credit, continued to rise into November –
third chart.

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UK-employment-rise-no-obstacle-to-rate-cut_chart03

Today’s public finances release for December provides further evidence
of significant labour market cooling, with pay-as-you-earn tax receipts,
smoothed over six months, showing the slowest year-on-year growth since
2013 – fourth chart.

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