Key points:
- The UK labour market shed 41,000 jobs in June, the eighth-straight monthly drop, according to the Office for National Statistics.
- Wages grew at a 5% annual pace in the three months through May.
The UK labour market continued to weaken in recent months, though data from the Office for National Statistics point to a continued gradual slowing rather than a nosedive. June’s provisional figure indicates a decline of 41,000 jobs, the eighth successive monthly drop. But hefty revisions to May’s payrolled employees data paint a less alarming picture than previously. The revised figures now show a decline of 25,000, rather than the previously reported 109,000 drop.
Wage growth continues to gradually ease, though at 5.0% in the three months to May, the annual rate of regular pay growth was slightly stronger than expected. Coupled with June’s higher-than-expected inflation print, policymakers at the Bank of England will likely stick to their guidance for gradual interest rate cuts, beginning with a widely anticipated reduction in August.
Amid a struggling economy and persistently high inflation, the prospect of stagflation is making life uncomfortable for the Bank. Rate setters have hinted at speeding up rate cuts should the labour market begin to slow more materially. But for now, conditions appear to be waning rather than tanking, which will likely translate into a gradual easing of inflation pressures by the end of the year.
