abrdn: Response to UK jobs report
Luke Bartholomew, Deputy Chief Economist at abrdn, responds to the UK jobs report released this morning:
'The labour market report is unlikely to move the dial much on interest rate expectations. Wage growth continues to gradually moderate, but still needs to come down further to be fully consistent with the Bank of England’s target.
Uncertainties over data quality mean it is hard to know what to make of the drop in unemployment, but arguably it is consistent with the strong growth earlier this year even if other surveys do point to labour demand slowing.
The concern for BoE policymakers will be that a sustained fall in unemployment may slow the progress of wages and so inflation sustainably returning to target. That helps explains why the Bank has sounded somewhat more cautious about the pace of easing than other major central banks.
For now, another interest rate cut in November looks nailed on, and we will see how the Budget changes the outlook for the path of rates from there.'