Thursday, June 2, 2016

Forex - UK Preview: due 15th May - Apr/May unemployment statistics

In April the claimant count fell by 2.4k following March's 14.7k increase and the claimant count rate is at 2.1% (down from an upwardly revised 2.2% in March). In May we expect the number of people claiming jobless benefits to rise by 3k, bringing the total to 741k and keeping the claimant rate stable at 2.1%. It's possible that pre-referendum jitters have a part to play in a rising claimant count, for instance the manufacturing sector suffered job cuts for the fourth successive month as clients postpone spending ahead of the referendum.

The ILO measure of employment rose by just 44k in the 3-months to March and we expect to see a pick-up to 90k in the 3-months leading to April.

Meanwhile the number of unemployed persons fell by just 2k in the 3-months to March but we expect to see a 10k rise in the 3-months to April, again, likely related to pre-referendum jitters but also consistent with the steady slowdown in economic activity over the last several months. This leaves the total at 1.70mn (prev: 1.69mn) and keeps the ILO unemployment rate stable at 5.1%.

Average weekly earnings (incl. bonuses) for March surprised to the upside of expectations at 2.0% in 3m y/y terms (prev: 1.9%) however we expect earnings to slow to 1.7% in April despite the National Living Wage that came into place on 1st April. Although respondents in the summary of business conditions survey stated that NLW was causing labour cost growth per employee to edge higher, CIPD said feedback received from employers suggested "forecasts for wage inflation for 2016 are too optimistic" since low inflation, greater pension costs and a large increase in the minimum wage will make employers reluctant to offer pay rises elsewhere on the pay scale. This puts into question the sustainability of any NLW-driven increase and could also be a factor behind moderating jobs growth as employers look to claw back some savings.

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