Yael Selfin, Chief Economist at KPMG UK, comments on today’s labour market data
“The data points at a slight rise in unemployment to 4.1% in the third quarter, with the level of employment largely unchanged. However, a strong rise in hours worked during the third quarter saw a fall in productivity, as measured by output per hour, despite the relatively strong GDP growth that quarter.
“Earnings, as measured by regular pay, continued to rise above 3%, with real earnings growth reaching 1% in September thanks to falling inflation. This should provide households with some breathing space, and support consumer spending at times of increased Brexit uncertainty.
“Today’s figures will be a slight conundrum for the MPC. While unemployment is moving upwards slightly, against the Bank of England’s expectations, and pointing at a possible reduction in inflationary pressures going forwards, earnings growth remains strong in light of the weak productivity numbers. Any further signs of weakness in the labour market, however, are likely to see the MPC trading more cautiously in the period around Brexit.”
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