Davy Research

Market comment

UK labour market showing signs of weakness

DAVY VIEW

At first glance, an unemployment rate steady at 4.3% suggests that the UK labour market is in good health. However, scratching beneath the surface reveals signs of weakness in yesterday’s release. Employment fell on the quarter for the first time in two years, down 0.2%. Wage growth also remains muted at 2.4%, well below the rate of inflation at 3.1%. However, that gap should begin to close in the coming months as sterling-induced price hikes wash through the annual comparison.

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