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Preview: November UK Jobs Data

Dec 16 2019, 08:38 PM (+06) |

Now that the UK election is over, at least the political side of Brexit seems on firmer footing going forward.

Therefore, attention is turning away from the divorce drama and back to the underlying data.

The UK leaving in January still has economic implications, and the pound ought to be affected. After some rosier than expected data last week, tomorrow we get employment data.

Lately, central bank policy has shifted towards an emphasis on maintaining employment as a way of pushing inflation. The BOE hasn’t been as outspoken on that subject. And with core inflation close to target rate, they have been holding off on rate cuts.

However, with a steadier outlook following the General Election, a worse performance in jobs numbers could renew calls for a rate cut.

Can We Look Forward to More Cheap Money?

So far, only two members of the nine on the Monetary Policy Committee – Saunders and Haskel – have been calling for more stimulus.

A significant disappointment in employment might change the numbers a bit. Also, we shouldn’t forget that BOE Governor Mark Carney is nearing the end of his term, and will move on to other things at the end of January.

Generally, central banks are loath to rock the boat ahead of a change of the guard, leaving many analysts suggesting that if a rate cut happens, it will be in February.

Also later today and tomorrow, Carney will be speaking at the ECB. Mostly it’s expected to be protocol, with a set speech to be released ahead of time. But, if a reporter gets the right question in, we might get some insight into the bank’s outlook.

This week, the market is getting ready for the holidays. So, most would expect leaders to avoid major announcements that might rile up the markets.

What We Are Expecting

For tomorrow’s releases, we want to be looking at the Claimant Count Change. This is the number that usually moves the market.

Current projections are for there to have been 20.2K net additions to the unemployment rolls in the UK. This would be down from 33K prior. So far this year, the UK hasn’t managed to have a single month of net job adds, with last month being the worst since 2011.

The data covers the lead-up to the General Election. And many employers could have held off on hiring new help until that uncertainty was resolved. After the election, there would still be time to bring on additional staff for Christmas trading. So, an unusually high number this time around might not be interpreted as all that bad.

On the other hand, there has been some euphoria in the markets following the election, and underperformance in the jobs data might be a rude return to reality.

Other Figures

Expectations are for the unemployment rate to remain steady at 3.8%, where it has been stuck for the last six months, with ups and downs of a decimal.

What might be of more interest from the monetary stability standpoint is the weekly earnings figure, which is projected to bump up to 3.8% growth from 3.7% in October. That would bring it just off the recent highs and might provide some arguments to not cut rates.

Of course, we’ll get the final answer on rates this Thursday following the MPC meeting, and it would be expected the pound remain active until then.

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