The average unemployment rate this year is down from 4.8% to 4.4%. However, the seasonally-adjusted number shows that, averages apart, the unemployment rate has hardly moved since the end of 2014 as the economy continues to grow below trend. This is an interesting development since yet another labour market indicator suggests that manufacturing employment growth has actually accelerated this year.
It is possible that data efficiency is less than perfect to show the clear trend emerging out of the labour market. Yet, it is safe to assume that the labour market is far from achieving full employment, and that it does not look possible this year.
"We expect the unemployment rate at 4.62% (4.31% at seasonally adjusted rate), which is nearly 1pp higher than the levels seen in 2005-08", notes Societe Generale.
With the economy expected to grow to its potential over next few quarters, the labour market is expected to improve through the remainder of this year and next. However, the unemployment statistics and the pace of growth suggest that the economy will still take several months to absorb the slack in the labour market, a precondition before wages start rising significantly to add to inflationary pressure.
