Commenting on the ONS labour market figures out today, Yael Selfin, Chief Economist at KPMG UK, said:
“Today’s data increases the discrepancy between unemployment falling to a record low of 4.5% by May and nominal wage growth remaining subdued. We would typically expect low unemployment to push wages up so there is clearly more at play here.
“With average nominal weekly earnings rising by 2% (excluding bonuses) and inflation at 2.9%, real earnings fell by 0.5% compared to a year earlier. Given the continuing pressure on household budgets we expect consumers to remain cautious for the rest of this year, making the prospects of a pick-up in spending more distant.
“Not only is the unemployment rate at its lowest point since 1975, it has also reached the Bank of England’s ‘break even’ point of unemployment from which we are likely to see inflation accelerate more because the labour market is too tight and companies compete too much for workers. This, combined with concerns over rising levels of consumer credit, should make the BoE keen to reverse last year’s rate cut. However, sluggish wage growth and a faltering economy will probably mean the first rate hike is pushed into next year.”
For media enquiries, please contact:
Jess Liebmann, KPMG Corporate Communications
T: 0207 311 3245
M: 07551 135778
KPMG Press Office
Tel: +44 (0) 207 694 8773
KPMG LLP, a UK limited liability partnership, operates from 22 offices across the UK with approximately 13,500 partners and staff. The UK firm recorded a revenue of £2.07 billion in the year ended 30 September 2016. KPMG is a global network of professional firms providing Audit, Tax, and Advisory services. It operates in 152 countries and has 189,000 professionals working in member firms around the world. The independent member firms of the KPMG network are affiliated with KPMG International Cooperative ("KPMG International"), a Swiss entity. Each KPMG firm is a legally distinct and separate entity and describes itself as such.
KPMG has launched a state of the art digital platform that enhances your experience and provides improved access to our content and our people, whatever device you are on.