Investment Clock insights

Fall in employment rate will raise eyebrows


Ian Kernohan

15 November 2017

This morning’s data was a little on the soft side, with the first fall in total employment for a year.  Although the employment rate only fell very slightly, this will raise some eyebrows.  There were 1.42 million unemployed people, 59,000 fewer than the April-June period and 182,000 fewer than a year earlier.  
The unemployment rate remains at 4.3%, down from 4.8% a year earlier and the joint lowest since 1975, while average weekly earnings rose by 2.2% year on year. After taking inflation into account, real earnings growth is still negative, however we expect this to turn positive next year as inflation falls back.  
There was nothing in the data to suggest that the Bank of England should quicken the pace of policy tightening and we expect the Bank Rate to remain on hold well into next year.

This morning’s data was a little on the soft side, with the first fall in total employment for a year.  Although the employment rate only fell very slightly, this will raise some eyebrows.  There were 1.42 million unemployed people, 59,000 fewer than the April-June period and 182,000 fewer than a year earlier.  

The unemployment rate remains at 4.3%, down from 4.8% a year earlier and the joint lowest since 1975, while average weekly earnings rose by 2.2% year on year. After taking inflation into account, real earnings growth is still negative, however we expect this to turn positive next year as inflation falls back.  

There was nothing in the data to suggest that the Bank of England should quicken the pace of policy tightening and we expect the Bank Rate to remain on hold well into next year.

Past performance is not a guide to future performance. The value of investments and the income from them is not guaranteed and may go down as well as up and investors may not get back the amount originally invested. The views expressed are the author’s own and do not constitute investment advice.