TD Securities expects the UK labour market to remain soft but stable in June, with employment rising 100k on a three\u2011month basis and unemployment edging down to 4.7%. Headline average weekly earnings are forecast to slow to 4.0%, while ex\u2011bonus pay holds at 3.4%. TD argues these wage dynamics should reassure the Bank of England and support keeping Bank Rate unchanged.<\/p>\n
Wage slowdown aligns with inflation target<\/p>\n
“We expect the labour market to continue along the steady but lacklustre path seen since the start of the year, with June delivering 100k change in employment on a 3m\/3m basis (mkt: 120k; prior: 148k).”<\/p>\n
“The unemployment rate is likely to come down slightly as a result, but remain elevated at 4.7% (mkt: 4.8%; prior: 4.9%).”<\/p>\n
“Elsewhere, we could see a fair drop in the headline average weekly earnings growth measure to 4.0% 3m\/y (mkt: 4.0%) from 4.3% in May, as March’s outsized bonus figures fall out of scope and reverse the upward pressures seen in the past three months.”<\/p>\n
“Ex-bonus wage growth should remain at 3.4% 3m\/y (mkt: 3.4%) while private earnings ex-bonus growth is set to dip to 2.7% 3m\/y (mkt: 2.8%; prior: 2.9%).”<\/p>\n
“The latter two measures sit within reach of levels consistent with the BoE’s inflation target, likely reassuring the majority of the MPC that labour market dynamics are limiting second-round inflation pressures and supporting a majority vote to keep Bank Rate on hold.”<\/p>\n