UK jobless rate likely declined again in three months to January

Employment in the UK continues to increase at a quick pace, resulting further in a likely decline in the jobless rate to 5% in the three months to January from 5.1%. The declining trend in the claimant count had halted in the autumn. However, it has resumed and is likely to have dropped by 10k in February after a drop of 14.8k in January.

The markets and MPC has been surprised that as unemployment has continued to decline, earnings growth has also dropped in the past few months. Earnings growth is expected to have been increased by 0.1pp for both regular and total earnings from 2.0% to 2.1% and from 1.9% to 2.0% respectively in the three months to January. However, the growth rates are still low in terms of inflation pressures.