UK labor market rocks with wages accelerating in November

• The UK unemployment rate dropped to 4.0% in November from 4.1% in the previous two months.
• The regular pay in the UK rose above expectations up 3.4% over three months to November while wages including bonuses rose 3.3% y/y.
• The claimant count rose 20.8K in December, down from 24.8K in November.

The UK labor market remains a bright point of the UK economy with wages rising above market expectations and the unemployment rate dropping back to a four-decade low after ticking up to 4.1% in October and September last year. 

The regular weekly pay in the UK rose 3.4% in three months to November to reach  £494 per week in nominal terms. The regular pay excluding bonuses was up 1.1% over the year in real, inflation-adjusted terms.

At the same time, the total weekly pay in the UK rose 3.3% in three months to November to reach  £527 per week in nominal terms. The regular pay excluding bonuses was up 1.2% over the year in real, inflation-adjusted terms.

The UK unemployment dropped to a four-decade low of 4.0% in November even with claimant count upwardly revised 24.8K in November. During the final month of the last year, the number of people seeking unemployment benefits rose 20.8K.

The strength of the UK labor market confirms the prediction of the Bank of England with wages becoming a dominant inflation driver in months ahead. While Brexit uncertainty weighs heavily on the business investment and consumer spending, the labor market features remain strong proving the strategy of a one rate hike a year for the Bank of England that is set to publish its fresh macroeconomic forecast at the beginning of February in its February Inflation Report.

The UK regular pay growth rate

Source: Office for National Statistics