That might also help explain why, despite the steady fall in payrolls, the volume of redundancy notifications sent to the government has barely increased in recent months. Firms only need to notify the authorities of layoffs if they total more than 20 at any one site, and given many hospitality firms are likely to be smaller than this, it’s unlikely to capture the weakness in the sector.
None of this means the Bank of England can relax about the jobs market. Looking at the bigger picture, vacancies are below pre-Covid levels in virtually all sectors now and in many cases, by some margin. The fall in the total number of job openings is showing no signs of easing, and relative to pre-pandemic levels, the number of vacancies has fallen more sharply than in the US, France and Germany, judging by data from Indeed. The unemployment rate has also risen this year, though this data is still potentially dubious owing to long-running reliability issues.
That is helping wage growth to – very slowly – fall. Annual private sector regular pay growth stayed at 4.8% in the most recent month, but in month-on-month terms, the increase was much more modest. We think private sector wage growth will fall back to 4% or below by the end of the year.
If that happens, that’s still a good reason to think the Bank of England will cut rates again in November. That remains our base case, though after last week’s surprisingly hawkish meeting, were we to get a combination of better jobs data and hotter-than-expected inflation data, the Bank may well prefer to remain on hold until the new year.