Resilient Jobs Market Reflects Robust Economy Despite Rate Cut Uncertainty

The state of the UK labour market has become almost as important as inflation data in interest rate decision-making. The recent choice to cut rates was narrow, and the Monetary Policy Committee is having to balance weakening wage data and rising unemployment, with ongoing inflationary pressures, particularly on food.

Today’s figures showed surprising resilience in the UK’s labour market. Wage growth held firm however unemployment rose. Rises in employment taxes and the minimum wage appear to have had only limited effect on the UK’s employment market. 

This should be a partial fillip for the UK economy, potentially shoring up consumer confidence for those with jobs and helping revive the UK’s economic performance. On the downside, it may deter the Monetary Policy Committee from further rate cuts. Persistently high wage inflation has been a significant force in driving inflation and keeping interest rates elevated.

Nevertheless, in spite of this good news, households should still look to build their resilience where possible. Inflation is set to peak at around 4%, which means households are facing higher bills, even with the cushion of rising wages. It may be beneficial for savers to ensure their savings are working as hard as possible.