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Bloomberg
The UK labour market held up in the face of political turmoil in the three months through November, giving Bank of England (BOE) policy makers pause as they weigh whether to cut interest rates.
The employment rate hit a record high after the number of people in work surged by 208,000, the most in almost a year and double the market forecast. The jobless rate held at a four-decade low of 3.8%.
The pound edged higher after the release of the figures, climbing 0.2% to $1.3050 as of 9:43 am London time on Tuesday. Gilts pared an advance, while money-market pricing for a January BOE rate cut remained around 65%.
The report ends a run of weak data and confirms the labour market as the most resilient part of the British economy. Jobs continued to be created at an impressive pace against a backdrop of slowing economic growth as a missed Brexit deadline and then a looming general election hit
demand.
Vacancies fell in the fourth quarter, though they were higher than in the period through November — the first rise for 11 months. Basic wage growth slowed modestly to 3.4% from 3.5%.
A spate of feeble economic readings, from GDP to retail sales, and dovish comments from officials including BOE Governor Mark Carney have left markets betting heavily on a January 30 rate reduction.
The labour market is a lagging indicator, and policy makers Michael Saunders and Silvana Tenreyro have expressed concern that the jobless rate could rise next year unless the economy quickly improves.
Crucial will be PMI data due January 24, which will provide an insight into how the economy fared at the start of the year.
Surveys show hiring received a boost from Boris Johnson’s election win last month but it’s not clear whether the momentum can be sustained, with the UK about to embark on potentially difficult post-Brexit trade talks with the European Union.