UK Jobs Market Shows No Signs of Recovery

The UK jobs market continues to show signs of weakness, with private sector payrolls falling another 34k in August. This represents a year-on-year decline of 0.8%. The consumer services sector is particularly affected, with job numbers dropping by over 3% annually.

Employment growth across the rest of the private sector remains slightly negative, consistent with major hiring surveys that suggest the wider jobs market is effectively flatlining. Despite this, wage growth appears to have reached a floor of 2.9%, and may even move higher in the coming months.

The Bank of England's analysis suggests that wage growth is consistent with a medium-term inflation target of 2%. With no indication that this will change, the UK economy seems less susceptible to another long-lasting inflation wave. While a rate hike can't be ruled out if energy prices stay high, our base case is for the Bank of England to keep policy on hold into next year.