UK's total earnings growth to rise strongly in May

UK claimant data is in downward trend in unemployment and that might soon manifest itself in the LFS data as well. The main interest will be in the average earnings data. An acceleration in both regular and total pay is being seen. 

The LFS unemployment rate should continue on its downward path, in the three months to May. The new claimant count which now includes claimants ofUniversal Credit as well of Jobseekers' Allowance should lose 6k in June after 6.5k in May.

"Growth in regular pay has picked up sharply in the last three months from 1.6% yoy in January to 2.9% yoy in April. It is expected to hold at that level in May which will increase the 3mth yoy headline rate from 2.7% to 2.9%", forecasts Societe Generale. 

No increase is expected in bonuses compared to a year earlier. This will be taken as a very hawkish development by the markets.

"One would then expect that the headline rate of total pay growth would match that of regular pay but, because of quirks in the way seasonal adjustment is applied, total pay growth should jump from 2.7% to 3.3% 3mth yoy", added Societe Generale.