Yael Selfin, Chief Economist at KPMG UK, comments on today’s labour market data
“Today’s data confirms that the UK labour market continues to tighten, with the proportion of vacancies rising in 10 out of 18 sectors in Q2 against the previous quarter. This reflects the concerns we are hearing from our clients regarding skills shortages.
“Earnings, as measured by average regular pay, rose by 2.8% in June in nominal terms compared to last year, and by 0.5% in real terms, giving households a little bit more room to spend or ease their borrowing. Earnings growth remains relatively weak compared with its long term average, and we are unlikely to see any significant improvement until productivity performance recovers.
“Today’s figures showing an increase in labour productivity of 1.5% in Q2 is the largest quarter-on-year increase since late 2016. This is encouraging, but given the preliminary nature of the figures and the volatility of the data, it is too early to call what we’re seeing a new normal. Meanwhile, the expected gradual moderation in inflation, as the effects of the depreciation of the pound and higher oil prices dissipate, should raise real earnings growth, alleviating some of the pressure on households.
“Unemployment fell to 4% in Q2, further below what the MPC currently perceives as the equilibrium rate, and lower than the Bank of England’s latest forecasts. The MPC’s concerns with rising domestic inflationary pressures are likely to see it keep to its current course of gradual and moderate rate rises, as it aims to nip any inflationary pressures in the bud.”
For media enquiries, please contact:
Riku Heikkila, CNC Communications
Tel: 020 3219 8812
KPMG Press Office
Tel: +44 (0) 207 694 8773
Follow us on twitter: @kpmguk
Notes to Editors:
KPMG LLP, a UK limited liability partnership, operates from 22 offices across the UK with approximately 14,500 partners and staff. The UK firm recorded a revenue of £2.2 billion in the year ended 30 September 2017. KPMG is a global network of professional firms providing Audit, Tax, and Advisory services. It operates in 154 countries and territories and has 200,000 people working in member firms around the world. The independent member firms of the KPMG network are affiliated with KPMG International Cooperative ("KPMG International"), a Swiss entity. Each KPMG firm is a legally distinct and separate entity and describes itself as such.
© 2020 KPMG LLP, a UK limited liability partnership, and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative, a Swiss entity. All rights reserved.
KPMG International Cooperative (“KPMG International”) is a Swiss entity. Member firms of the KPMG network of independent firms are affiliated with KPMG International. KPMG International provides no client services. No member firm has any authority to obligate or bind KPMG International or any other member firm vis-à-vis third parties, nor does KPMG International have any such authority to obligate or bind any member firm.