DAVY VIEW

This morning’s UK labour market data suggest that jobs growth remains robust in Q1. The Labour Force Survey measure of employment rose 0.3% on the month to 32.95m, and was accompanied by signs that the labour market is starting to loosen as inactivity falls. The unemployment rate rose to 3.9%. However, February also saw a marked acceleration in pay growth. Private sector earnings were up 7.3% on the year. This will bolster expectations that the Bank of England will raise rates again to 4.5% at its May 11th meeting.