UK: Labor data paints a benign picture but pre-referendum - Lloyds

Analysts from Lloyds Bank point out that data from the United Kingdom showed a benign picture of the labor market pre-referendum.

Key Quotes:

“Today’s UK labour market figures for the 3 months to May painted a benign picture that broadly maintained pre-referendum trends. The unemployment rate unexpectedly declined further to 4.9%, the lowest since 2005, a level at which capacity constraints might be expected to put upward pressure on wages.”

“While that strong pace of employment growth would have helped dismiss fears of increased economic uncertainty gnawing away on job gains, today’s report is nevertheless a dated look at trends prevailing in the economy prior to the June 23rd EU referendum.”

“Labour market data tend to lag economic developments, at least without the complicating factor of hard-to-discern shifts in underlying productivity performance. As such, it will be some time before the change in economic circumstances in the aftermath of the referendum, both in terms of demand and supply, will feed through to the labour market.”

“That leaves today’s data as important in providing a starting point for the MPC’s Inflation Report projections, but offering little insight on how quickly and how far the MPC might be inclined to loosen policy in the aftermath of the referendum.”