UK unemployment rate unchanged at 5.7% in January, earnings fall

The unemployment rate in Britain remained stuck at 5.7% over the three months to January, while earnings growth slowed, according to the Office for National Statistics (ONS), sending the pound immediately lower.

Economists had been anticipating a drop of one tenth of a percentage point to 5.6%.

The claimant count was 31,000 lower in February. That was a slightly smaller-than-expected drop than the consensus estimate of -32,500.
However, the estimate for January was revised to show a decline of 39,400, instead of the -38,600 initially estimated.

In year-on-year terms, earnings growth in the three months to January slowed to a 1.8% pace, from 2.1% the prior three months. The consensus estimate had been for an increase of 2.2%.

Excluding bonuses, the rate of increase in average weekly earnings slipped to 1.6% from 1.7%.

As of 09:41 cable was moving 0.53% lower to 1.4671, having traded at 1.4732 just prior to the announcement.

The proportion of part-time workers who wanted a full-time job fell by just one tenth of a percentage point to 16.2% - well above its pre-crisis level of around 9%, Unicredit Research pointed out.

“Taken by itself, it would suggest a more gradual tightening cycle"

That contrasted with average weekly hours worked, which held at 32.2 and have already recovered to their pre-crisis level.

On the other hand, and in a positive sign for the economy, the number of vacancies increased to 735,000 in the quarter ended in February - the highest level since comparable records began in 2001.

Wednesday’s employment report was released alongside the minutes of the latest meeting of the Monetary Policy Committee (MPC).

In its wake, Daniel Vernazza, economist at Unicredit Research wrote: “In a separate report, the minutes of the MPC’s March meeting were ‘dovish’, with the ‘news’ that the Committee is concerned by a tightening of monetary conditions and, in particular, sterling’s appreciation.

“Taken by itself, it would suggest a more gradual tightening cycle. We continue to expect the first hike in August this year, with the risks very much skewed towards a later hike.”