Yael Selfin, Vice Chair and Chief Economist at KPMG in the UK, has shared key insights and comments on the recent labour market data. Selfin noted that
the United Kingdom‘s labour market continues to weaken as employers await seemingly vital Budget updates.
Yael Selfin of KPMG shared that the recent data strengthens the Bank of England’s case to resume slashing interest rates next month, as moderating wage pressures and “a softening labour market are expected to bring wage growth closer to levels consistent with the inflation target by the end of the year.”
Selfin added that wage growth slowed to “4.5% in September while headline pay growth has seen upward pressure from higher pay settlements in the public sector feeding through since the start of the year.”
They further noted that the public sector pay growth has now “edged up further to 7.6% in September, and remains significantly above private sector pay growth, which fell to 3.8%.”
As mentioned in the update from KPMG UK:
“Public sector pay growth may now be approaching a peak, with last year’s generous settlements not expected to be repeated given the fiscal pressures the Chancellor is facing. Meanwhile private sector pay growth, the Bank’s preferred measure, is also anticipated to fall further with more people in the labour market seeking work, weakening workers’ bargaining power.”
KPMG UK’s insights also emphasized:
“Unemployment increased to 5% in the three months to September. Hiring activity remains weak and survey evidence suggests that additional uncertainty from the Budget is keeping a lid on activity, as employers await the details of any fiscal measures. However, there is scope for a tentative recovery in hiring if businesses manage to avoid another round of employment cost increases.”
As reported this past week, KPMG UK shared commentary on the latest Bank of England rate decision. As widely reported and anticipated, The Bank of England decided it will keep rates on hold as it awaits the Budget, noted Yael Selfin, Chief Economist at KPMG UK.
