Soft Labour Market Supports BoE Rate Hold

The UK labour market is expected to remain soft but stable in June, according to TD Securities. Employment is forecast to rise by 100k on a three-month basis, while unemployment edges down to 4.7%. The firm's analysis suggests that these wage dynamics will reassure the Bank of England and support keeping the Bank Rate unchanged.

TD Securities expects the headline average weekly earnings growth measure to slow to 4.0% in June, from 4.3% in May. Ex-bonus pay is forecast to hold at 3.4%. The latter two measures are seen as sitting within reach of levels consistent with the BoE's inflation target.

The firm argues that these wage dynamics should limit second-round inflation pressures and support a majority vote to keep Bank Rate on hold. TD Securities' analysis suggests that the labour market will continue along a steady but lacklustre path, with June delivering 100k change in employment on a three-month basis.