13 June 2001, 13:13 UK May labor market data-OVERVIEW and SNAPSHOTS
--UK Apr headline avg earnings up annual 5.2%
--UK adj May claimant count unemployment dn 3,200 from Apr
--UK Apr headline avg earnings in line with mkt forecasts
--UK Apr unadj earnings ex bonuses 5.3 pct pts, bonuses -0.7 pct pts
--UK Feb-Apr ILO unemployment 5.0% down vs Nov-Jan 5.2%
--UK Feb-Apr ILO unemployment down 65,000 on Nov-Jan
--UK Feb-Apr manufacturing unit labor costs up 0.5% on yr
--UK Apr single month avg earnings up provisional 4.7% on yr
--UK Apr public sector headline avg earnings up 4.3% on yr
--UK Feb-Apr Labor Force Survey employment up 67,000 on qtr
--ONS: Big contribution to UK Apr avg earnings from public sector
London, June 13 (BridgeNews) - The U.K labor market continues to
tighten, with the latest figures showing further modest falls in
unemployment and a small increase in average earnings. The Office for
National Statistics said headline average earnings in April rose 5.2% on
the year, in line with expectations and a little higher than the 5.0%
growth recorded in March. The claimant count measure of unemployment in
May dropped 3,200, slightly less than expected.
* * *
Single-month average earnings rose 4.7% in April, compared with 4.3%
in March. The main effects were from pay increases in the public sector,
overtime in some manufacturing sectors, a recovery from the low levels
recorded in March, and higher pay in the construction sector, the ONS
said.
Single-month public sector average earnings rose 5.4% on the year in
April, the highest rate since January 1993 and up from 4.5% in March.
Stripping out the effect of bonus payments, April's single-month
unadjusted earnings growth was 5.3% on the year, the highest since March
1997 and up from 4.8% in March. Bonuses, in effect, reduced the
single-month figure by 0.7 percentage points, reflecting lower payments
than at the same time last year or changes in the timing of the payments.
Headline average earnings growth looks likely to slow in May, when the
big bonus-fuelled February figure of 6.5% will drop out of the three-month
average.
On the unemployment side, the claimant count rate was unchanged at
3.2% in May. The broader ILO measure dropped to 5.0%, the lowest level
since records began in 1984.
Employment continued to grow, rising 67,000 in the three months to the
end of April on the previous three months. The total in employment, at
28.142 million, was the highest since records for the Labor Force Survey
began in 1984.
The figures are yet to show much sign of the anticipated turnaround in
employment growth. Although the manufacturing sector is still shedding
jobs, service sector and public sector employment growth has been enough
to absorb the falls.
The Bank of England's Monetary Policy Committee has been worried about
the tightness of the labor market for some time and would have been
reluctant in any case to cut interest rates much further while earnings
growth is at present levels. However, coupled with the spike in inflation
in April reported by the ONS on Tuesday, it seems there is plenty of
evidence for those on the MPC worried that inflationary pressures are
building.
The following are analysts' reactions to the data:
David Page, economist at Investec:
"Although the headline average earnings number was as expected and
high because of the February (bonus related) distortions, markets will be
most forward this could be concerning for the MPC.
"Taken together with the inflation numbers we saw yesterday we are
probably at the bottom of the (interest) rate cycle unless manufacturing
does deteriorate dramatically from here on in."
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