WIREDGOV

• A decline in the claimant count and a solid rise in private sector jobs is encouraging
• But we would be cautious about getting too carried away given that the pace of job losses in the public sector is likely to accelerate over the coming months
• Muted wage growth strengthens our conviction that a wage price spiral is unlikely

“Today's results are a bit of a mixed bag. While unemployment on the ILO measure rose to an 8-month high, the more timely claimant count posted a monthly decline in February.
 
“It was notable that while there were significant job losses in the public sector in Q4, the increase in jobs in the private sector was enough to offset this. This trend is encouraging, but we're not getting too carried away given that the pace of job losses in the public sector is likely to accelerate over the coming year and it remains to be seen whether the private sector is strong enough to bridge the gap over a more prolonged period.
 
“There is little change in the wages story. January is an important month for negotiating wage settlements, but growth in regular pay remained muted, strengthening our conviction that a wage-price spiral is unlikely. A large part of the public sector is about to begin a two-year pay freeze, while workers in the private sector are unlikely to be able to force up wage settlements. At the same time unemployment continues to remain high. Therefore we do not expect any significant pickup in pay growth over the months ahead. These soft earnings figures will be music to the ears of those on the MPC who are looking to keep rates on hold, but on the flip side they do point to a further squeeze on consumers' spending power.”

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