Cooling uk jobs market questions need for multiple rate hikes

Key arguments

• Private sector payrolls fell 34k in August, down 0.8% year-on-year, with consumer services shedding jobs at over 3% annualised.
• Weak wage growth at 2.9% (3.3% adjusted) is consistent with the BoE's 2% inflation target, judging by the Bank's own analysis.
• The UK jobs market is far cooler than during the Ukraine shock, making severe second-round inflation effects from higher energy prices less likely.
• ING expects a 6-3 vote to hold rates this week and no wholesale hawkish pivot, though a hike cannot be ruled out if energy prices stay high.

Corresponding source evidence

1. Wage growth across the private sector is consistent with a medium-term inflation target of 2%, judging by the Bank of England’s own analysis earlier this year. · this year
2. A lot will depend on the government’s decision on next April’s National Living Wage rise, due with the October budget, though it’s unlikely that it will materially outstrip this year’s 4.1% increase for over 21s. · this year
3. In short, the fact that the UK jobs market is far, far cooler than it was when the Ukraine shock hit four years ago, means we’re much less likely to see severe second-round effects on inflation from higher energy prices.