UK jobless rate at 42-year low amid strong labour demand

Bloomberg

UK unemployment held at a 42-year low in the three months through August and the number of people in work approached a record high, according the figures published.
The latest snapshot of the labour market from the Office for National Statistics may help to explain why the Bank of England appears to be edging towards its first interest-rate increase for a decade.
In evidence to lawmakers, BOE Governor Mark Carney made clear that the erosion of slack in the economy is the primary concern as
policy makers prepare for their November 2 meeting. He said a rate increase would probably be needed in the “coming months,” repeating the recent signal from the bank.
Wage growth was little changed at just over 2 percent—well behind the rate of inflation—but officials are signalling they are no longer prepared to wait for a pickup before tightening policy.
Still, not everyone on the Monetary Policy Committee is on board with that idea. Dave Ramsden said that the lack of wage growth means he sees little sign of second-round effects from higher inflation, and that domestic price pressures remain subdued.
Responding to the labour-market data, Elizabeth Martins at HSBC Holdings Plc said the BOE is “still on” for a November rate hike, though it may not be a unanimous vote. The jobless rate stood at 4.3 percent in the latest period, staying below the 4.5 percent rate regarded by the BOE as the “equilibrium rate” which starts to fan inflationary pressures. The number of people looking for work fell 52,000 to 1.44 million. Employment rose 94,000 to 32.1 million. At 75.1 percent, the employment rate is just below the record 75.3 percent recorded in May to July.
The pound briefly jumped after the data before reversing its gains. It was at $1.3168 as of 10:57 am London time, down 0.2 percent on the day.
With the labour market tight and Brexit curbing immigration, boosting growth without generating
inflation may require a significant improvement in productivity, something considered unlikely given the dismal performance of recent years and the effect Brexit is having on investment. The pressure on living standards continued in the latest three months, with regular pay growth falling in real term for a sixth month. For some, that may be a reason to hold off raising rates.
“The gap between CPI and wage growth is likely to stay fairly wide for some time to come,” said James Smith, an economist at ING.

Sainsbury to cut 2,000 jobs
Bloomberg

The UK retail industry’s Brexit-linked turmoil deepened as J Sainsbury Plc said it would cut as many as 2,000 jobs, Zalando SE said the market is losing attractiveness and rival online fashion site Asos Plc discussed contingency plans.
Sainsbury’s move follows Tesco Plc, which announced 1,200 head-office job cuts in June. Asos, which sells clothing and accessories online, said it may handle more of its distribution activities out of Germany if the UK falls out of the European customs union.
That could put a damper on growth prospects for its 4,000-employee warehouse in Barnsley, England, although the company is continuing to invest in it for now.