With high inflation, a milder-than-expected recession and a wave of strikes in the UK, labor market data for November and December are likely to force the BoE to focus on the risk that inflation remains well above its 2% target. , even after eliminating the effects of precise energy. While key indicators such as the number of vacancies indicate that the job market will cool in the coming months, the acceleration of wage growth amid labor shortages will encourage further rate hikes by the Bank of England. While the nominal unemployment rate was flat at a nearly 50-year low of 3.7% in the September-November 2022 quarter, the jobless claims count rose slightly to 4.0% in December from 3.9%.

Quarterly employment in the UK rose by 27,000 in November after a similar rise in October. Although it is still strengthening in recent months, the pace of job growth has slowed significantly. In recent periods of high full employment, such as from 2017 to 2019, job gains of around 100,000 per quarter were considered normal. Modest employment growth is expected to turn to decline in the coming months as a moderate recession unfolds. In November, the number of jobs was 32.8 million, and employment remained about 300,000 below the record high of 33.1 million in January 2020. However, the number of vacancies, a measure of the demand for jobs, seems to be declining rapidly. Looking at the monthly estimate, job openings fell to 1.03 million in December, about 330,000 below April’s record high of 1.36 million. Despite a continued decline in December, job openings remained above a peak of 930,000 at the end of 2018. Judging by the sharp decline in vacancies in previous recessions, we should expect a significant decline in the coming months as a harbinger of a decline in employment. and weaker wage growth. The unemployment rate, while remaining low, rose by 3.4% in October (from 1.8% in April).

* Mr. Calum Pickering is an economist at Berenberg Bank.