The latest ONS figures indicate resilience in the UK labour market in early 2025 ahead of April’s rise in employment costs, with payroll employment and vacancies increasing slightly in February. Wage growth remains strong, with regular pay rising 5.9% year-on-year in January.
There were few surprises in the data and the Bank of England’s Monetary Policy Committee subsequently voted 8-1 to leave its base rate unchanged at 4.5%, while sticking to its gradualist guidance to future rate cuts. Policymakers will want to see wage growth receding from current levels, or at least the conditions for that to happen (such as a material weakening in the labour market) before feeling comfortable in signalling a faster pace of rate cuts.
While the jobs outlook remains tough, the relative stability in the official labour market data and lack of a meaningful uptick in redundancy notifications offers some reassurance. But we’re far from out of the woods, and an uncertain global economic picture is another cloud on the horizon.
