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U.K. employment rises in Q4 2018, jobless rate remains stable at 4 pct
The latest report from the ONS showed that the U.K. labor market ended 2018 on a strong footing. In the fourth quarter of last year, employment rose 167k from the third quarter, while the jobless rate remained stable at 4 percent, as anticipated. The ex-bonus measure of average earnings growth met market expectations, at 3.4 percent 3m/y, the fastest since 2008.
Demand for labor continued to rise, based on the series for job vacancies, which reached another record high of 870k in the three months to January 2019. This is in spite of the employment component of the IHS Markit Composite PMI indicator having fallen below 50 in January, indicating a contraction in employment intentions.
A considerable proportion of the 167k total gain in employment in the fourth quarter of 2018 was accounted for by people transferring straight from being outside the labor force and classed as inactive, rather than from those already in the labor force but who were employed.
A flash estimate of productivity indicated a 0.2 percent quarterly rise in output per hour in the fourth quarter, and dropped 0.2 percent for the 2018 as a whole. On the contrary, the narrative on wage growth is more about higher until labor costs and inflation that more efficient production of output.
Average earnings growth came in at 3.4 percent 3m/y for both the measure including bonuses, and the ex-bonus series.
In all, the latest U.K. labor market report should not really change expectations for interest rates much, noted Lloyds Bank in a research report.
“The Bank of England used the February Inflation Report to signal a more cautious outlook on Bank Rate increases. However, this latest news is a reminder that there is pay growth in a tight labour market which is consistent with a higher level for Bank Rate in due course”, said Lloyds Bank.
At 14:00 GMT the FxWirePro's Hourly Strength Index of British Pound was bullish at 95.6371, while the FxWirePro's Hourly Strength Index of US Dollar was neutral at -38.7239 more details on FxWirePro's Currency Strength Index, visit http://www.fxwirepro.com/currencyindex