Investment Clock insights

Labour market data highlights consumer squeeze


Ian Kernohan

12 April 2017

The latest UK labour market report shows that employment continues to rise, while unemployment has fallen again.  The unemployment rate is sitting at 4.7%, down from 5.1% a year earlier, and has not been lower since the summer of 1975.  
However, despite this apparent tightening in the labour market, there are few signs of any upward pressure on wages. Therefore, we would expect the Bank of England to keep interest rates on hold this year, as households face a real income squeeze.

The latest UK labour market report shows that employment continues to rise, while unemployment has fallen again. The unemployment rate is sitting at 4.7%, down from 5.1% a year earlier, and has not been lower since the summer of 1975.  

However, despite this apparent tightening in the labour market, there are few signs of any upward pressure on wages. Therefore, we would expect the Bank of England to keep interest rates on hold this year, as households face a real income squeeze.

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.