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(Bloomberg) — Britain’s labor market is holding up better than expected according to figures published on Thursday just hours before the Bank of England’s latest interest-rate decision.
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The number of employees on payrolls rose 2,000 in May, tax data published by the Office for National Statistics showed. It was much better than the 23,000 drop expected by economists, and April’s decline was revised from 100,000 to 53,000.
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Unemployment slipped to 4.9% in the three months through April, while vacancies fell further to the lowest since early 2021.
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The numbers suggest that while the UK labor market is weak, it may not be deteriorating as much as economists had feared after the energy shock from conflict in the Middle East.
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It follows a weaker-than-expected inflation print on Wednesday and a plunge in global energy prices in recent days after the US and Iran announced a truce designed to reopen the Strait of Hormuz. The raft of positive news has caused a sharp retrenchment of bets on the BOE hiking borrowing costs to contain inflation.
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The Monetary Policy Committee was given early access to Thursday’s figures which were published ahead of the BOE’s decision at 12 p.m. UK time, when it is widely expected to leave rates on hold at 3.75%.
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While traders are still pricing in one quarter-point hike by the end of the year, many economists believe the BOE may now be able to avoid increasing rates at all. Doves on its panel have argued that a weak jobs market is likely to stop workers demanding steep pay rises to compensate for inflation.
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The ONS said wage growth excluding bonuses held steady in the three months through April, at 3.4%.
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