GB: Labor market slows, inflation lowers wages

LONDON, Aug 16 (Reuters) – Employment in Britain remains high but started to ease in the second quarter, official statistics showed on Tuesday, as businesses held back on hiring and pre-inflation wages took a nosedive.

The unemployment rate certainly remained steady at 3.8% in April-June, not far from the lowest level in half a century, despite recession fears, again relayed at the beginning of the month by the Bank of England (BoE).

But the number of people with jobs rose by only 160,000 from the previous quarter, a figure well below expectations when economists polled by Reuters had forecast 256,000.

In the meantime, the number of unemployed has increased slightly as thousands of jobseekers have returned to the labor market.

The number of job vacancies, at 1.274 million, is still near its record high, but has fallen for the first time since mid-2020.

“Although hiring is slowing, we expect the unemployment rate to remain relatively stable until the end of the year” due to the persistent labor shortage, commented Jake Finney, economist at PwC. .

The Bank of England estimates that unemployment will not start to rise again until mid-2023, reaching 6.3% within three years.

Statistics released Tuesday also show a 4.7% increase in wages excluding bonuses in the second quarter compared to the same period last year. But after adjusting for the increase in consumer prices, wages fell by 4.1%, which is unheard of since monitoring of this indicator began in 2001.

“The extent of the deterioration of wages is even more significant than the official figures suggest, because the estimated wage increase remains artificially enhanced by the effects of the partial unemployment compensation mechanism that was in force last year”, notes Nye Cominetti, senior economist at the Resolution. Fundamental think tank.

Monthly consumer price figures will be released on Wednesday, and the Reuters consensus expects them to rise 9.8% year-on-year. The BoE expects inflation to reach 13.3% in October, the highest since 1980. (Reporting by William Schomberg and David Milliken, French version Marc Angrand, editing by Kate Entringer)

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