Wage Growth Holds Steady at Elevated Levels
The Average Earnings Index (3m/y) remained at 5.6%, marginally below the 5.7% forecast. Despite economic headwinds, nominal wage growth remains firm—particularly when bonuses are included. Elevated pay levels continue to support household spending, but the persistence of wage inflation complicates the Bank of England’s rate-cut timeline. As inflation eases, real earnings are improving, helping restore consumer confidence.
Unemployment Rate Stays at 4.4%
The unemployment rate remained unchanged at 4.4% in the three months to February, in line with forecasts. While the figure signals labor market stability, the ONS has flagged volatility in the underlying data, urging caution in interpretation. Payrolled employee estimates and claimant counts are seen as more immediate gauges of labor conditions.
Market Forecast: Cautiously Bullish on Employment Stability
Traders should view the latest figures as mildly supportive of a stable UK employment picture. The softening in jobless claims and firm wage growth point to labor market resilience, reducing immediate fears of deterioration. However, wage inflation remains the key risk. If it persists, the Bank of England may hesitate to ease policy despite softer growth. The next labor data releases will be critical in confirming the trend. Until then, the outlook leans cautiously bullish for employment, with policy expectations finely balanced.