UK economy produces soft numbers

Added 20th April 2016

The United Kingdom economy produced some underwhelming numbers in the three months to the end of February, according to the ONS.

UK economy produces soft numbers

Average weekly earnings were up just 1.8% over the period, undershooting consensus expectations of around 2.3%. Once bonuses were excluded however, the figure was much closer to expectations at 2.2%. 

To add to this, unemployment rose by 21,000, the first increase since July 2015.

The statistics will raise concerns that the economy is already being hit by uncertainty stemming from a potential exit from the European Union.

The numbers would suggest companies are deferring hiring decisions until after the vote on 23 June.

“Last week the Bank of England said that concerns about the EU referendum had begun to affect the real economy, and the increase in unemployment announced today adds some weight to that hypothesis,” said Ben Brettell, senior economist at Hargreaves Lansdown.

“It’s possible businesses are delaying decisions about hiring and investment until after June’s vote, which could lead to a slowdown in the first two quarters of this year," he continued. "Nevertheless, the bigger picture is that the UK labour market remains in reasonable health. The increase in unemployment wasn’t even enough to change the rate when expressed to one decimal place, which stayed at a decade low of 5.1%, compared with 5.6% for a year ago. Employment of 74.1% is the joint-highest since records began.”

Brettell added that the soft data will further embed the view that an interest rate rise is a long way off. 

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Alex Sebastian

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Alex joined Portfolio Adviser in April 2014 and has been a financial journalist since 2008. He has previously held editorial positions at the Financial Times Group and Euromoney Institutional Investor. Alex is NCTJ qualified and has a degree in economics from the University of Sussex.

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