UK labour market data – comment

Commenting on the UK labour market data, Andy Scott, Associate Director at Chatham Financial, said: “The UK labour market continued to see strong jobs growth during the final three months of last year, in sharp contrast to how the economy performed in terms of GDP growth.

“With the number of people in work rising more than expected and the employment rate hitting a fresh record high, the data continues to suggest the underlying economy remains in fairly good health. We would expect the strength of the labour market, coupled with strong recovery in various housing market indicators to lead to a pickup in consumer spending in the current quarter. Retail sales data for January is released this Thursday and will be the first real indicator of whether increased sentiment translates into increased spending and demand. There’s certainly a lot more optimism among businesses and investment firms about the UK following the election.

“There are however signs that the labour market is levelling off, with the unemployment rate failing to move below the 3.8% level it first reached in April last year, while average earnings cooled further. The weak global backdrop and the UK-EU trade talks are likely to remain a concern for CEOs and this could weigh on hiring intentions in the coming months.”