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Pace of UK employment growth to remain solid - RBS

FXStreet (Łódź) - Dmytro Bondar, Technical Analyst at RBS predicts that UK labor market data, due out on Wednesday, should show that employment growth continued at a steady pace in August.

Key quotes

"The headline 3-month employment change is likely to be rather modest."

"We forecast employment to rise by 30k in the three months to August (NB, this implies a sizeable 90k rise on the single-month data in August)."

"On the basis that there are not any extensive revisions to the recent inactivity data – this would equate to a large rise in inactivity in the latest three months – then unemployment would fall by around 110k in the three months to August, leaving the unemployment rate unchanged at 6.2%."

"Looking through the short-term distortions, the pace of employment growth remains solid and we forecast this to persist: 1.3% growth in total employment in 2015."

"On the claimant count we look for a fall of 32k in September, in line with the trend over the past year, lowering the unemployment rate to 2.8%."

"Average Weekly Earnings (AWE) growth rebounded from deflationary territory of -0.1% 3m y/y in June to +0.6% in July. We forecast a small rise to 0.7% in August as the base effect distortions unwind and the (increasingly familiar) modest underlying increase in nominal pay resumes."

"On the ex-bonuses AWE rate we forecast a small increase to 0.8% 3m y/y in August. In general, wage inflation remains subdued and there is typically little ‘news’ or new pay deal information at this time of year – it will not be until towards the end of 2014 that we will get a better handle on pay settlement for 2015."

"Our forecast is for a modest pick-up in headline AWE to around 1.4% 3m y/y by end-2014."

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