UK claimant count likely to have risen in July on Brexit uncertainty

A rise in claimant count in July is expected due to Brexit uncertainty. The UK labor data for three months to May had surprised on the upside in the run-up to the 23 June referendum by showing acceleration in hiring growth. In June, the employment indices in all the three PMI surveys softened, indicating towards certain loss in momentum in the month.

However, the Labor Force Survey works only on a rolling three month basis, therefore the effect of June weakness would be diluted in the employment growth data for the three months to June, said Societe Generale in a research report.

The unemployment level surveyed on the same basis is expected to continue to drop, albeit slowly that might not be enough to counter the active labor force growth, stated Societe Generale. This might lead to a rise in jobless rate to 5 percent from 4.9 percent; however, the calculation should be near to the cusp so there is a possibility of it remaining at 4.9 percent.

But, the first Brexit effects on the labor market in the claimant count are expected to be seen. The claimant count is expected to have risen by 25,000 in July after rising a tad by 0.4k in June, according to Societe Generale.

“Earnings growth should be 2.3 percent 3mth yoy on both the regular and with-bonus measures after 2.2 percent and 2.3 percent respectively the month before”, added Societe Generale.