UK: Slowdown in wage growth momentum yet to materialize – TDS

Analysts at TD Securities review the latest jobs report from the UK:

"The unemployment rate increased to 3.8% (mkt: 3.7%) in the three months ending in February, as the labour market continues to soften."

"On the other hand, wage growth was broadly unchanged on a year-ago basis, with headline wage growth coming in at 5.9% 3m/y (mkt: 5.1%) and ex-bonus wage growth actually increasing to 6.6% 3m/y (mkt: 6.2%). Both measures surprised sharply to the upside, however."

"Private sector regular pay, the MPC's favorite wage growth measure, increased 0.9% m/m. The data appears to confirm our view that strike action in December and January weighed on wage growth those months. As such, the slowdown in wage growth momentum has yet to properly materialize."

"Overall, while the uptick in the unemployment rate will be welcomed by the MPC, the main takeaway from this report is the substantial increase in wage growth. This will continue to make the case for another 25bps hike from the MPC at its next meeting."