UK employment to rise by 175k in the three months to July - RBS

Research Team at RBS, is forecasting the UK employment to rise by 175k in the three months to July and this employment gain would be consistent with a fall of 50k in unemployment, leaving the ILO unemployment rate at 4.9% (with risks of a fall to 4.8%).

Key Quotes

“On the claimant count, we forecast a 2.0k fall in August, leaving the unemployment rate at 2.2%.

Average Weekly Earnings (AWE) growth showed fractional increases on both the headline (2.4% 3m y/y from 2.3%) and ex-bonuses (2.3% 3m y/y from 2.2%) rates. As we move further away from the key point in the year for pay deals and bonus announcements (January-April) the earnings data appear to be settling at growth rates some way below those levels consistent with the 2% CPI target being met over the medium term (sustained wage growth closer to 4% y/y is likely to be consistent with the inflation target being met). There was little by way of change in the sectoral earnings data.

The summer months are typically a quiet time for wage deals and bonus payments and there is little in the survey data to suggest any change of trend. On the ex-bonuses rate we forecast a rise in line with the recent % m/m trend, nudging the 3m y/y rate down to 2.2% from 2.3%. Base effects relating to bonus payments suggest more apparent downside risks for the headline AWE rate. Even assuming a 4.0% m/m rebound in bonus payments, the 3m y/y rate would fall to 2.1% from 2.4%.”