Commentary Directory

UK Employment: August 2023

Jacob Hess
September 12, 2023

UK Unemployment Rate

9/12/2023 (August 2023)

4.3% (+0.5 ppts)

Above Expectations

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Employment Rate 75.5% (-0.5 ppts)
Job Vacancies 989,000 (-64,000)
Nominal Regular Pay (%YoY) 7.8% YoY (prev 7.8% YoY)

There were some important movements reported in the latest UK labor market update. While the total number of employees was mostly unchanged in August, there was a sizeable shift downward in the employment rate in the three months to July, specifically down -0.5 ppts to 75.5%. The employment rate is down -1.1 ppts from the pre-pandemic period in February 2020. In tandem, the unemployment rate increased 0.5 ppt to 4.3% in that same period, now above the pre-pandemic level. The total number of hours worked fell substantially over the quarter. The decline in employment levels is an overall signal of easing hiring demand. This is also seen in the continued trend of declining job vacancies. In August, vacancies fell -64,000 to 989,000 which is only 188,000 above the pre-pandemic level.

From ONS

The Bank of England has its eyes on wage growth as major force driving inflation higher. In July, regular pay growth remained at the record high of 7.8% YoY in the three months to July. The month-on-month increase in regular pay was the slowest so far in 2023 at 0.5% MoM in July (very similar to June but just below) and brings the three month average down to about 0.65% which is still substantial but lower than the faster rates above 0.7% seen earlier this year. This is good news for the Bank of England but not good enough to keep it from hiking again.