Labour market: healthier than UR rise suggests
- The unemployment rate disappointed expectations by increasing to 4.4% in December. With vacancies still rising, this looks like either a short-term blip or a structural thing rather than indicating new disinflationary spare capacity.- Flows into employment strengthened in Q4 and the rise in unemployment was far above what the flows accounted for, which suggests a noisy sampling issue. Job security and record-high voluntary job moves signal a still healthy labour market.
- Wage growth continued to rise, and a sustained impulse means further increases above 2.5% y-o-y 3mma (ex-bonuses) are likely over the coming months. Real wage growth is nonetheless currently stagnant, which is restraining retail sales.
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