The UK labor market continued with its recent trends, seen from the figures for January to March 2016 period. UK’s jobless rate remained at 5.1% for the fifth consecutive month, on par with expectations. At this level capacity constraints are likely to exert upward pressure on wages. But there continues to be a slight sign of a considerable pressure on pay, noted Lloyds Bank in a research note. The headline pay growth rebounded surprisingly. Average weekly pay rose at an annual rate of 2% from 1.9% earlier. However, stripping bonuses, regular pay growth decelerated to 2.1% from 2.2%.
A narrative of rebounding growth in productivity has projected moderation in growth of job; however, the rate of deceleration in growth of employment in recent months has been unexpectedly sharp, added Lloyds Bank. With the near-term uncertainties, the central bank’s MPC is expected to “take limited steer from the data, in either direction”, said Lloyds Bank.
“For the time being, both our and the MPC’s working assumption is that the re-absorption of the economy’s spare capacity will resume in the second half of the year”, noted Lloyds Bank.
