Simon Harvey, analyst at Monex Europe, has spotted that UK pay growth slowed in February alone.
Real basic pay (earnings excluding bonuses, adjusted for inflation) only rose by 1.3% in February, down from 1.9% in January.
This monthly pay repost can be volatile (which is why the ONS prefer the three-month reading of 1.5%), but it may show that bosses were reluctant to agree pay rises as a no-deal Brexit loomed.
Tej Parikh, senior economist at the Institute of Directors, reckons Brexit uncertainty may be helping job creation.
The theory is that firms are unwilling to spend heavily on expensive new equipment to boost productivity, so they’ve been hiring new staff instead.
“The elongated period of uncertainty has kept businesses in a hiring cycle. Many firms have lacked the confidence to put funding toward training, technology, and new machinery, which has in turn meant firms need to hire more workers to lift output.
Without a pick-up in investment, low productivity will also keep wages from growing further, particularly when considering the higher regulatory costs businesses are facing this tax year.
That implies that job creation could stall if Brexit is finalised, or that productivity will remain weak if the crisis rumbles ever onwards.
And here’s Theresa May’s chief of staff on the unemployment report:
Government hails employment statistics
Minister of State for Employment Alok Sharma has welcomed today’s jobs report, and urged fellow MPs to fix the Brexit crisis before the economy turns sour.
“The UK jobs market continues to go from strength to strength, proving the underlying resilience of the British economy.
“But we must not take this for granted. We need to work urgently to get behind a Brexit deal that protects this jobs record and gives employers the certainty to continue to invest in their workforce and boost wages.
“With more people in work than ever before, it is welcome news that wages are continuing to rise at their fastest rate in a decade.
“And by increasing the living wage and personal tax allowance for 2019, this Government is putting more money in people’s pocket, benefiting millions of families across the country.”
UK unemployment; What the experts say
Economist Rupert Seggins argues that UK wage growth should be even stronger, given the labour market is apparently so tight.
Pawel Adrjan of jobs site Indeed.com says the labour market has shrugged off Brexit worries.
The number of people classed as economic inactive in the UK has hit its lowest level on record, at 20.7% (down from 21.2% a year ago).
That means more people are either working or looking for work.
The long-term picture is that fewer women have been classed as economically inactive over recent decades, narrowing the gap with men.
Over the last five years, the number of women looking after the family or home has dropped by 271,000 while the number taking early retirement is down 242,000).
Wage growth continues
Total pay in the UK has kept rising at its fastest rate in a decade (at least until you account for inflation).
Pay including bonuses rose by 3.5% per year in the last quarter, the same as a month ago. That’s the biggest jump since the financial crisis in 2008.
Basic pay rose by 3.4% per year, dipping from 3.5% (last month’s figures have been revised up a little)
But if you adjust for inflation, then real pay is only rising by just over 1.5% per year – the fastest since summer 2016.
In another healthy sign, Britain’s employment rate has hit a new joint record high, at 76.1%.
That’s up from 75.4% a year ago, and hasn’t been higher since current records began in 1971.
The employment rate for men is 80.5%, the highest since February 1991.
For women, the employment rate has risen to 71.8%, a joint-record high.
UK jobless rate remains at 44-year low
Newsflash: Britain’s jobless rate has stuck at its lowest level since 1975, when Denis Healey, Jim Callaghan, Roy Jenkins, Barbara Castle and Tony Benn were sat around Harold Wilson’s cabinet table.
Just 3.9% of UK adults were classed as unemployed in the three months to February, new figures from the Office for National Statistics show.
That matches last month’s figures, making it the joint lowest since 1975, and indicating that Britain’s Brexit deadlock hasn’t caused job losses.
More to follow….
Newsflash: Sterling implied volatility (a measure of whether investors are betting on the pound surging or slumping) has hit its lowest level in 16 months.
That shows the City isn’t expecting fresh Brexit drama soon, now that Article 50 has been extended until October.
JD hits record high
Boom! JD Sports has shrugged off the challenges in the retail sector by posting its best ever profit, sending shares to a record high.
Revenues jumped by 39% in the 12 months to 4th February, with solid growth in the UK, and at JD’s European division. This sent pre-tax profits up 15% to £339m, as consumers continued to snap up its leisurewear and sneakers from brands such as Adidas, Nike and Calvin Klein.
The company’s also hoping to make a splash in the US, having recently bought the Finish Line business.
Shares in JD have hit a record high in early trading, up 3% to 553p.
That values the company at over £5.3bn, or more than several big names FTSE 100 companies including Marks & Spencer (£4.5bn), holiday chain TUI (£4.7bn) or Sainsbury (£5.16bn).
Not to mention rival Sports Direct, worth just £1.6bn after complaints about workplace conditions, and a failed attempt to take over Debenhams.
JD is currently a member of the FTSE 250 index of medium-sized firms, but looks well placed for promotion at the next reshuffle…
Shares in Galliford Try plunged by more than a fifth when markets opened this morning after the housbuilder and construction firm spooked investors with a profit warning.
The company said it would shrink its construction business and warned full year profits would be £30m-£40m lower than City analysts were expecting, party because of cost overruns on some projects, including the troubled Queensferry Crossing in Scotland.
Galliford Try had already increased its provision on the Aberdeen by-pass project, after it was left to pick up the pieces when Carillion – its former partner on the project – collapsed.
After initially falling more than 20%, shares are now down 18% at 596p, making it the biggest faller on the FTSE 250.
Lufthansa shares rocked by profits warning
Ouch! Shares in German airline Lufthansa are sliding, after it posted a shock loss for the last quarter.
Germany’s biggest airline made an adjusted loss of €336m in January-March, down from a profit of £52m a year ago. It blamed rising fuel costs and downward pressure on fares, which has sent a shiver through the travel sector.
Lufthansa shares have slumped 5% at the open in Paris. In London, easyJet have lost 1.4%.
Falling fares is excellent news for passengers, especially those who’ve put off booking holidays because of Brexit. But it also suggests an overcapacity problem in the airline industry, which has already seen several airlines collapse in recent months.
If the City predictions are correct, the UK’s jobless rate will remain at its lowest level since Harold Wilson was prime minister in 1975.
Introduction: UK jobs report and German ZEW survey
Good morning, and welcome to our rolling coverage of the world economy, the financial markets, the eurozone and business.
A flurry of fresh economic data from the UK, Germany and the US will give us a fresh insight into the health of the global economy today.
In the UK, the big event will be the unemployment report for the three months to February. It’s likely to show the jobless rate has stuck at its lowest level in over 40 years at just 3.9%, in the face of relentless Brexit drama.
Wage growth (excluding bonuses) is also expected to hold steady at 3.4%, meaning earnings would be outpacing inflation.
Marc Ostwald of ADM Investor Service predicts that UK firms also kept hiring workers, though at a slower rate than last year.
For all the chatter about weak and/or cautious UK business investment, restrained by a lack of clarity on Brexit outcomes, the UK labour has proved impressively resilient, and today’s report is not expected to alter that perception.
Employment is seen posting a solid 171K gain, slower than the prior 222K but nevertheless strong, and Average Weekly Earnings are forecast to hold around their post GFC cyclical highs at 3.5% y/y headline and 3.4% ex-Bonus, while Vacancies seem likely to remain very robust, having posted a new all-time / cyclical high of 870K in January.
A particularly strong jobs report could pile pressure on the Bank of England to consider raising interest rates, while a weak report may create concerns that the economy is faltering.
The latest survey of German economic sentiment, from the ZEW Institute, could also move the markets. Economists predicts that investors and analysts will be gloomier about the current economic situation, but more optimistic about future prospects.
A new healthcheck on the US manufacturing sector is expected to show a small pick-up in industrial production last month, up 0.2% despite the US-China trade war.
On the City front, security firm (and takeover target) G4S is reporting results, along with fashion chain JD Sports, retailer Card Factory, recruitment firm Hays and construction firm Galliford Try.
- 9.30am BST: UK unemployment and earnings report
- 10am BST: ZEW index of German investor confidence
- 2.15pm BST: US manufacturing report