Labour market outlook remains pretty dismal, with unemployment expected to reach 9.3% next spring – ITEM Club

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Nida Ali, economic advisor to the EY ITEM Club, comments on today’s labour market figures:

  • A better set of figures compared to recent months
  • But sluggish wage growth suggests continued pressure on household incomes 
  • The labour market outlook is still pretty dismal with unemployment expected to reach 9.3% next spring

“Although unemployment continues to increase, these are a better set of figures compared to recent months. There were some signs of a stabilisation in the labour market, as employment edged up and there was also an increase in the number of job vacancies in the three months to January.
 
“The trend of weak pay growth however remains unchanged. The sharp fall in January's CPI inflation to 3.6% will provide households with some relief but, with wage growth lagging behind at barely 2%, it will be a long time before consumers' real incomes stabilise. The pressure on households is likely to continue for some time yet.
 
“Overall, the outlook for the labour market is still pretty dismal. Survey data for January was relatively upbeat, but the improvement is unlikely to be enough to create more jobs in the economy. We expect the number of unemployed people to hit nearly 3 million next spring, representing 9.3% of the total work force.”

 

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