Strong performance from the labour market with encouraging news across the board - ITEM Club
Nida Ali, economic advisor to the EY ITEM Club, comments on today’s labour market figures:
- Yet another strong performance from the labour market with encouraging news across the board
- These figures support our view that upward revisions to Q2 GDP are on the cards
- But the consistent decline in unemployment may be difficult to sustain, given that recent activity indicators have been sluggish
“These figures point to yet another strong performance from the labour market, with encouraging news across the board. The fall in headline unemployment was accompanied by a robust increase in full-time employment and a rise in vacancies, which indicates underlying strength in the labour market. This is further supported by a decline in the claimant count, which had been rising over the past couple of months. Today's data casts further doubt on the GDP figures for Q2 and supports our view that upward revisions to GDP are on the cards.
“However, looking ahead, it might to difficult to sustain these strong trends. Recent activity indicators have been sluggish implying that the private sector will find it increasingly difficult to create jobs. With public sector employment expected to keep declining, overall unemployment will probably nudge up over the second half of the year.
“Meanwhile, although wage growth is still very soft, it is encouraging that it hasn't deteriorated over the past few months in the face of worsening activity. Even though we don't expect much of a pick-up in pay growth in the near future, the expected decline in the inflation rate should help to stabilise real incomes in the second half of the year.”