Britain’s labour market still shows signs of slack Recent data paints a mixed, albeit positive, landscape. The UK jobs market report, released on Tuesday, indicated a stagnation in job growth despite an increase in the population. The report highlighted falling wage growth and a rising jobless rate, raising concerns about the overall health of the economy. Against this backdrop, all eyes are on Britain’s GDP data due out for August on Thursday. Markets are set up for a very tepid growth.
This meant that payrolled employment in Britain increased by 10,000 in the months of July and August. While job loss is not new and has characterized the economy in recent years, this increase suggests a departure from the persistent trend of job losses. This small increase arrives even with downward revisions. That data paints a picture of a notable reversal cut of half the contraction in employment since last year’s budget. The amendments represent a net loss of 90,000 jobs, a significant drop from the first projected 126,000.
As encouraging as this report may be, it hasn’t changed the story much at all in favour of the Bank of England. After two months of downward revisions, many analysts are pointing to a weakening labor market. They’re suing because they say there really is no job growth despite the booming population. Wage growth has plummeted to new lows, making this time especially difficult for workers and policymakers.
That mixed bag of results has been the cause of very different interpretations in mainstream media. Other media outlets clearly still present the data with a much more rosy spin. This rosy picture could deny the reality of the new, prevailing troubles for Britain’s labor market. The truth is that unmistakable signs of slack are everywhere and their continued presence threatens the ongoing economic recovery.
As the markets wait for today’s explosive GDP data release, the news is already baked in with low expectations for strong growth. City analysts predict zero growth in Britain’s GDP in August. This limited growth is a reflection of continued uncertainty in the labor market and economic conditions more generally. The pound had little immediate response to the jobs report. As indicators of economic activity improve, attention will inevitably shift back to what these results may mean.