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UK jobs hit record high as Bank of England considers first post-pandemic interest rate hike
The Reuters, British employers took their payrolls to a record high in September, shortly before the end of the government’s wage subsidies programme, potentially encouraging the Bank of England’s progress towards a first post-pandemic interest rate hike.
According to Reuters, data showed the biggest month-on-month increase in the number of employees on companies’ books, up by 207,000 from August, as employers turned to recruitment agencies to find staff and recovering accommodation and food firms created jobs.
Separate official data showed on Tuesday that the unemployment rate edged down to 4.5% in the three months to August from 4.6% in the May-July period, as expected by economists in a Reuters poll.
The BoE, which is gearing up to become the first major central bank to raise rates since the coronavirus crisis struck, is watching to see how many people became unemployed after the end of the furlough programme.
Around 1 million people are likely to have been on the scheme when it ended on Sept. 30, according to an estimate by the Resolution Foundation think tank.
Hussain Mehdi, macro and investment strategist at HSBC Asset Management, said the data left open the possibility of a BoE rate hike before the end of the year.
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“The data show an ongoing improvement in the health of the UK labour market, although it’s too early to assess the impact of the end of the furlough scheme in September,” he said.
“However, the recent hawkish tone from Monetary Policy Committee members suggests inflation concerns are now firmly front of mind, lowering the bar for rate increases. A decent October jobs report could open the door to a hike as soon as the December meeting.”
The BoE is also monitoring pay growth as it tries to gauge how persistent a recent jump in inflation is likely to be.
Average weekly earnings were 7.2% higher than in the same three months of 2020, slowing from the previous reading of 8.3%.
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Excluding bonuses, earnings rose by 6.0% in the June-August period, also losing some momentum.
The ONS estimated the underlying pace of wage growth, taking into account how job losses during the coronavirus lockdowns affected predominantly lower-paid workers, stood between 4.1% and 5.6% for regular pay in nominal terms.
That compared with regular pay growth of about 3% just before the pandemic hit.
Finance minister Rishi Sunak said the government was committed to helping people find work after the expiry of the furlough scheme.
Source: reuters
