UK: Better-than-expected gains in wages - TDS

Analysts at TD Securities note that today's UK employment report showed better-than-expected gains in wages (2.9% y/y for ex-bonus wages, 3.0% y/y for private sector ex-bonus wages), stronger hours worked, an unchanged unemployment rate (4.0%), and a slowing in employment growth (3k).

Key Quotes

“Together, these point to a continuation of the labour supply shortage narrative seen in recent surveys such as the PMI: fewer candidates are on the job market, forcing employers to pay more to hire the workers they need, but at a slower pace of hiring than previously.”

“While we believe that the BoE is on the sidelines until mid-2019, yesterday's decent monthly GDP report and today's upside surprise to wages should give them confidence that the underlying economy has not deteriorated too much as Brexit uncertainty has increased. Once the political risks have subsided in March 2019, they will be in a position to hike Bank Rate twice next year.”