The U.K. labor market has till now defied the projections of an increase in
unemployment in reaction to the Brexit uncertainty shock, said Societe Generale
in a research note. This is possibly because the real economy has not been hit
much as was anticipated in the short term. However, it is true that the pace of
economic activity growth is decelerating and the employment index in services
PMI has softened. Hence, the unemployment picture is expected to turnaround,
added Societe Generale.
But the upcoming labor release is likely to show that the claimant count recorded another fall of 5000 after 8.6k fall in July. The sharp increase in employment growth in May to 0.6 percent three month-on-three month from 0.1 percent in February is one of the most striking features of the recent labor data, noted Societe Generale.
The three-month survey indicates that the May surge would still be present in July so that the recorded employment growth would ease a bit. The jobless rate is expected to remain at 4.9 percent. Earnings growth is expected to have eased to 2.2 percent three-month -on- three-month in the three months to July on both the regular and with bonus measures from 2.3 percent and 2.4 percent respectively, stated Societe Generale.