Employment data due from Brexit-land today, scheduled for 0830GMT
- We expect better bonus and regular pay to push up earnings to 1.9% 3m/y and broadly the same for core earnings which would, however, still not be enough to outperform inflation.
- We expect four consecutive monthly increases in claimant counts to prevent the unemployment rate to fall further and keep it at 4.5%, same as previous month.
- The unemployment rate dropped to 4.5% in the three months to May 2017 – matching the Bank of England’s estimate for the equilibrium rate. Despite this, wage growth remained subdued, with total pay up less than 2% 3m/yr.
- The employment growth rate has slowed a bit, but remains remarkable, considering the slowdown in activity over H1 2017.
- We expect more of the same in this release: unchanged unemployment and still weak pay growth. The risks to unemployment could even be to the downside, with a drop to 4.4% not out of the question.
- Employment indicators continue to post surprisingly robust signals- in the July PMI surveys, at the Composite level the employment sub-component registered its highest print since October 2015. Nevertheless, last month’s 175k 3m/3m employment gain is unlikely to be surpassed or even matched this time round.
- On balance, we look for the unemployment rate to hold at 4.5%, but it shouldn’t be regarded as too much of a shock if it were to tick down to 4.4%.
- For average earnings, only modest changes, if any, in growth rates are anticipated this month. For the measure including bonuses, we look for 1.8% 3m/y (the same as last month) and a small dip to 1.9% 3m/y from 2.0% 3m/y in the excluding-bonus measure.
- This fits in closely with the BoE’s forecast for 2% average earnings growth in 2017 as a whole. The conundrum of impressive employment growth without upward pressure on wages isn’t set to be resolved this month.
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