- Employment change expected to rise modestly in May
- Unemployment rate and average weekly earnings predicted to be unchanged
- Sterling weakness based on Brexit and political turmoil
The Office for National Statistics (ONS) will release it Labour Market Overview at 8:30 GMT, 4:30 EDT on July 16th.
The employment change for May is expected to be 45,000 in May following Aprils 32,000 gain. The International Labour Organization (ILO) unemployment rate for May is predicted to be stable at 3.8%. Average annual weekly earnings ex-bonus will rise 3.5% in May after April’s 3.4% increase. The unemployment claimant count is forecast to add 22,800 in June following May’s 23,2000 gain.
The Brexit effect on Labor
The impact of the vote to leave the European Union in June 2016 has had an uneven impact on the UK labor market.
The unemployment (ILO) has continued to fall, as it did for the prior four years, from 4.9% in June 2016 to 3.8% in April this year where it is forecast to remain in May. This is the lowest rate in 45 years.
Average annual weekly earnings dipped in the second quarter of 2017 to 1.7% but have climbed for the past two years, reaching 3.4% in April, the best since November 2008.
The change in the unemployment claimant count, that is the number of people receiving unemployment related benefits, has risen steadily form a low of -11,600 in January to 23,200 in April 2019.
And finally the overall employment change has shifted to a lower level but has subsequently maintained that range more than two years. In July 2016 the 12 month moving average was 156,900. In the prior two years it had varied between 100,400 in July 2015 and 200,400 in June 2014. At the end of the Brexit vote year in December 2016 the average had dropped to 79,800. From then until April 2019 the range has been 70,500 in October 2017 to 114,400 in February 2019.
UK Economic Markers
The UK GDP has trended lower in the past two and a half years. Overall post-Brexit the annual GDP has varied from 2.9% in March and June 2017 to 1.1% in December 2018. The period is divided by November 2017 with the period before largely above 2% and the period after, with one exception below.
Industrial and manufacturing output show a similar pattern to GDP stronger in the period after the vote (June 2016 vote to June 2018) then lower.
Retail sales exhibit a good deal of volatility in the two years after the Brexit vote but the downshift came this year with four of six months negative and two straight in May and June.
The pound has been the most adversely affected by the post-Brexit mood but here it is the lack of conclusion and the emotional ups and downs of the political process more than any translation from the British economy.
In general the financial markets disapprove of a so-called clean Brexit, an exit without negotiated terms, and would sell the sterling lower if that were the choice of the new prime minister. But that is not at all certain to be the long-term result of a clean break.
The UK economy has run at a slower pace in the past 18 months but it does not appear to be edging towards recession. The risk to the employment figures for May and June partake of this weaker direction though there is as yet no sense of a strong downtrend.
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