Labour market data to shed light on state of UK economy
9th November 2015 By: Ranko Berich
UK Labour Market data – 10/11/15
Tuesday’s labour market data is all the more significant thanks to the importance that wage growth holds over the Bank of England’s decision making. As the Bank made clear last week, the outlook for wages is ambiguous to say the least, so hard data will be crucial for judging the state of the economy.
The main problem for the Bank of England is that forecasts for productivity and wage growth are surrounded by considerable uncertainty, hampering its ability to predict the outlook for inflation. In such an environment, there’s just no substitute for seeing solid wage growth.
Wage growth is on a solid upwards trend, but policymakers are looking for wage inflation to return to pre-recessionary levels, which remain far off target. This will take time, but the labour market is tightening so a noticeable improvement in this month’s data could raise a few eyebrows, and perhaps create a glimmer of hope for genuine inflation in the UK.