- UK unemployment rate fell to 3.8% from a revised figure of 3.9% in the previous three months
- Pay growth slowed but still at 6.2% excluding bonuses – in cash terms it’s a 1.9% boost for workers
- Vacancy numbers fall for 19th consecutive month but rate of decline slows
Danni Hewson, AJ Bell head of financial analysis, comments on the latest UK jobs data:
“We are still in the peculiar position where some good news is still taken as bad news by markets. The fact that the UK labour market is proving a whole lot more resilient than had been expected does seem to tie the hand of UK rate setters trying to keep a tight grip on inflation.
“During ‘normal’ times falling unemployment is a positive thing but a tight labour market means greater competition for workers, something which forces employers to up the ante when it comes to wages.
“Wage growth might have slowed considerably from that summer peak, but at 6.2% regular pay growth is still uncomfortably high for the Bank of England and in cash terms it puts an extra 1.9% into workers’ pockets.
“With inflation thought to have ticked up again last month, money markets are having to reassess their earlier exuberance. Expectations of a spring interest rate cut have fallen once again this morning and that uncertainty is already having a real-world impact on mortgage rates. But things are not straightforward – there are threads that need to be pulled.
“Vacancy numbers are still falling; business confidence has taken a big knock and many recruiters have reported that they’re seeing a serious slowdown in hiring intentions.
“Redundancy rates are up, and there doesn’t seem to be a week that passes which doesn’t include headlines about companies falling into administration or jobs being cut. Then there’s the record number of workers on long-term sick leave and an increase in students rounding out those economically inactive figures. What happens to the picture when and if they rejoin the labour force?
“Add to all of that uncertainty the fact that the data itself has been called into question. Updates are often subject to revision but until later in the year when new measures are implemented there are concerns about how reliable today’s numbers really are.
“On the flip side though there are clearly some cracks beginning to show in the UK labour market the economy has managed to keep plodding on which does suggest that recession might have been avoided, even if only by a very narrow margin.”
