U.K. employment regains momentum in November, labor market to remain tight in coming months

The latest U.K. labor market figures indicated that economic trends continued to be strong into the end of 2018, in spite of the ongoing uncertainties over the longer-term economic outlook. Employment growth regained some momentum, recording an above-consensus rise of 141k in the three months to November. Such a solid rate of job creation, proved enough to push the jobless rate down to 4 percent, said Lloyds Bank in a research report.

Delving into details, the compostion of employment growth also made pleasing news. Nearly all of the 141k rise in employment were in jobs that were classified as being full-time, with the other 15k coming from part-time jobs. Furthermore, with the surveys of business activity still indicating towards some resilience in companies’ hiring intentions, demand for labor market is likely to keep the labor market tight in the months ahead, stated Lloyds Bank.

The pace of pay continued to move higher in the month, with headline pay growth accelerating to 3.4 percent year-on-year, the highest since July 2008. Furthermore, evidence from pay settlement reports, along with recent announcements from various retailers of rises in minimum pay levels, implies that wage growth is expected to accelerate further in the months ahead, an effect that should be exacerbated as ‘churn’ in the labor market rises.

With headline inflation likely to come in more subdued compared to last year, ongoing rises in wage growth should therefore provide some support to the U.K. consumer, while also suggesting a rise in domestic inflationary pressures.

“In our view, further increases in wage growth support limited and gradual increases in Bank Rate. However, with Brexit concerns continuing to dominate, the Bank of England is unlikely to hike until the UK’s relationship with the EU becomes clearer”, added Lloyds Bank.

At 16:00 GMT the FxWirePro's Hourly Strength Index of United Kingdom was highly bullish at 153.703, while the FxWirePro's Hourly Strength Index of US Dollar was neutral at 39.395 more details on FxWirePro's Currency Strength Index, visit http://www.fxwirepro.com/currencyindex