Commentary Directory

UK Employment: February 2024

Jacob Hess
March 12, 2024

The UK looks to have added 20,000 jobs in February or a slight 0.1% MoM increase after a similar small gain of 15,000 jobs in January. The negligible move in employment caused the unemployment rate to remained unchanged in the three months to January at 3.9%. The employment rate however did edge down -0.1 ppts to 75.0. Most of the evidence of coolness in the UK labor market came from further relinquishing of job openings. In the three months to February, job vacancies fell -43,000 and, at a total of 908,000, are now only 107,000 higher than the start of the pandemic. This is the 20th consecutive three month period where job openings were lower. We are getting close to the point where businesses will not have excess job vacancies to shed, and at that point, there may be a tick up in unemployment.

As the labor market continues to get less tight, wage growth has maintained a path of deceleration, but maybe not as much as the BoE would hope. In the three months to January, wage growth of nominal regular earnings was 6.1% YoY, only just slightly lower from the 6.2% YoY in the three months to December. This is the lowest since October 2022, but is still above the 3.9% YoY peak observed before the pandemic and after the global financial crisis (2010-2019), and it even tops the peak of 4.6% YoY in the hot UK economy just before the financial crisis. This is probably to high to be acceptable to the BoE who have been notably more hawkish than the Fed and the ECB because of the persistence in UK inflation. It is also worth noting that strong wage growth is visible across industries regular earnings growth was still above 6% for manufacturing, finance & business services, and wholesaling, retailing, hotels & restaurants. Only the construction sector has seen earnings growth decelerate with the most recent reading at 3.3% YoY.