UK labour market shows signs of cooling in February

Data released by the Office for National Statistics on Wednesday showed the number of people unemployed in the UK rose 21,000 to 1.7 million q/q in February, increasing for the first time since the middle of 2015 while the UK’s official jobless rate held at a decade low of 5.1% during that period.

The number of people claiming jobless benefits rose 6,700 in March, after dropping a revised 9,300 in February, marking the first increase since August 2015. The claimant count rate stayed at 2.1%, the lowest since 1974. Wage growth, excluding bonuses held steady at 2.2% q/q in Feb, while wages ex-bonuses unexpectedly dropped to 1.8%, the lowest since February last year, from 2.1% previous.

The scale of the recent easing – as final data available in advance of the May Inflation Report – may give the MPC some pause for thought on the available spare capacity in the labour market. Also, Bank of England Agents’ report, released alongside the labour market data, points to some easing of recruitment difficulties alongside little change in employment intentions.

"Overall, recent labour market outturns are still not diverging meaningfully enough from the MPC’s assumptions; as the data stand, they provide little urgency for an MPC move – in either direction." said Lloyds Bank in a report.