The latest Penta and Oxford Economics research report indicates continued UK labor market resilience. Using our unique evidence-based data across a range of countries and languages, the findings are a positive sign following the geopolitical uncertainty and high interest rates that have been seen recently.
Key findings:
- The UK labour market is not cooling quickly enough to alleviate the pressure on the Bank of England to keep monetary policy tight, in our view. According to our proprietary sentiment data developed in collaboration with Penta, employment growth looks to have slowed marginally but not enough to help ease wage growth.
- Our interpretation of the data suggests that wage growth will once again beat the Monetary Policy Committee's wage growth forecast in September (data for July) and then again in October (data for August).
- Our sentiment data also implies that consumers – understandably buoyed by bumper wage and job growth – increased their spending by 0.5% in the three months to August. This adds upside risks to our baseline forecast for consumer spending in Q3, although our conviction on the consumer spending indicator is lower compared to the labour market indicators.
- The MPC's September decision to raise rates by 25bps might be in the balance, but a strong labour market will elevate concerns about persistent inflationary pressure among some members of the committee.
Read the full report here
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