UK’s Strong Jobs Report Outpaces Uncertainty

  • Jan 22, 2019 GMT
  • Team Kalkine
UK’s Strong Jobs Report Outpaces Uncertainty

On 22nd January 2019, Office for National Statistics reported steady growth in the UK’s employment. Workers’ wage growth hit a 10-year high and employment grew much more than anticipated in three months to the end of November’18; and despite uncertainties around Brexit deal, the labor market remained robust. Employment rate for September to November for an age group of 16 to 64 years of  men and women was 75.8 percent, record high since estimate began in 1971.

ONS mentioned average weekly earnings in combination with bonuses, increased by 3.4 percent on the year, the biggest jump since the 2008 global financial crisis. The median forecast in a Reuters poll of economists was 3.3 percent. Ex-bonus earnings increased by an annual 3.3 percent in the three months to November. Inflation-adjusted, total wage rose fastest for the last two years. Pay growth continued to surpass inflation rate, which fell back marginally in July to September. Number of people at work was up by 141000 in last three months to November, much better than Reuters poll forecast (rise of 85000). Fresh vacancies accelerated by 10000 to a record high of 853000. The reported numbers for economically inactive labours fell by 1 lakh to 8.6 mn, lowest on records. The unemployment rate for the latest period stood at 4 percent, lowest since 1970. In September to November period, 91000 workers had become redundant compared to 110000 during the same period last year.

British Pound surged from 1.283 against the US dollar before the data release to a high of 1.292.

Employed, Unemployed and Economically Inactive between 16 to 24 age group

For September to November period, the following statistics were noted-

Employed: number of people at work stood at 3.87 million approximately.

Unemployed: number of people unemployed fell by 27000 to 511000 approximately.

Economically Inactive: number of people economically inactive dropped down by 72000 to 2.6 million approximately.

Although employment has increased at the highest pace since April 2018, no one knows, whether it will sustain or plunge ahead of Brexit uncertainties.  British Prime Minister Theresa May presented her Brexit Plan B in front of the house yesterday, seeking some changes in the “Irish backstop.” However, chief EU’s negotiator Michel Barnier rebuffed immediately to renegotiate backstop plan.

With only 66 days left until UK is due to leave EU bloc on March 29, there is no formal agreement in London that is ready on how it should leave European bloc or the world’s biggest trading bloc. On the other hand, growing higher probabilities of “no deal Brexit” is also jolting the sentiments of the business houses. Business houses are cutting investment before Britain’s departure from EU in late March leaving overall economy growing at turtle’s pace.

However, UK’s reported jobs data for the latest period could help members of the Monetary Policy Committee of BoE, to keep the base rates unchanged in February meet. Although, BoE indicated that probability of increasing base rates could increase if there is no-deal Brexit scenario. Nevertheless, Chances of no-deal Brexit is very high, despite British Prime Minister denied for it.

With Bank of England reducing the interest rates to a historic low level, the spotlight is back on diverse investment opportunities. 

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