UK Labour Market: running hot – but is that strength or underlying ill-health?
- The employment rate came in at 75%, up slightly on the previous quarter
- Unemployment came in at 3.8%, versus 4.2% in the three months to November and market expectations of 4.0% (Trading Economics)
- Economic Inactivity was unchanged quarter-on-quarter at 21.9%
- Annual wage growth came in at 5.8%, versus 6.7% in the three months to November and market expectations of 5.6% (Trading Economics)
Nicholas Hyett, investment manager at Wealth Club, commented; “With unemployment a touch lower than expected and annual wage growth a touch higher, the UK labour market is proving stronger than economists had expected. However, the high temperature of the UK labour market could be down to ill-health rather than a sign of peak physical fitness.
A growing proportion of the UK workforce, more than one in five, is economically inactive, with an historically high number signed off long-term sick. A shrinking workforce is increasing demand for those workers who are available and pushing up wages. Good news for those in work, but not so positive for the economy as a whole.
Improving our national health is likely to become an increasing focus as we go through this election year. Not only for its own sake, but as a cure for the higher inflation and weaker economic growth the UK has been experiencing recently. No mean task for an NHS already under pressure.”
