On the face of it, the latest UK jobs report doesn’t look so bad. The unemployment rate ticked down to 4.9%. Payrolled employment rose after three consecutive monthly declines (it increased by a marginal 2,000 workers). Average weekly earnings growth was higher than expected.
But the details still look dovish for the Bank of England. And the report is another reminder that the case for higher rates is far from clear-cut.
Take those payroll numbers. April’s atrocious 100,000 fall in employment has been cut in half, after revisions. That’s not a surprise; the latest reading is always prone to change – and usually in an upwards direction. But the newly revised April figure, showing a 53k drop in workers, is still pretty bad. The better May figure should be read in that context – and if you strip out government, private sector payrolls still fell.
What’s more, April’s upgrade doesn’t appear to have lifted the consumer-facing industries which have been at the eye of the storm for the past year.
If anything, the rate of decline in job numbers in hospitality, retail and other consumer sectors is getting worse. We calculate that employment is falling by 3.5% in annualised terms across consumer-facing industries.