The labour market in the UK remains tight as a drum: wages are rising quickly in sectors with higher than average pay. According to the ONS, vacancies have fallen sharply this year. But the number of temporary employees has contracted sharply this year too.
The jobless rates in both the US and UK are at historic lows and are nearly identical (3.69% and 3.80% respectively). Job vacancies (openings) have dropped in the US this year too, but they remain well above the levels prevailing at the top of the last economic cycle (November 2001 to December 2007).
This may be the overriding theme. Hiring may be slowing simply because both countries are approaching full employment. Migration (inward) has dropped for both the US and UK. At its peak, EU migration into the UK hit 331k y/y (Q3 2015). This has since dropped to 99k y/y (Q2). The Mexican Government is clamping down hard on border crossings into the US.
This interpretation is possibly a little simplistic. Notwithstanding the 0.38% m/m bounce in real GDP reported for July, growth has clearly slowed in the UK this year. In the US, the data for the first half of 2019 was strong. The decline in vacancies has been somewhat larger in the UK, but the gap is not huge. Both the US and the UK saw openings and vacancies peak in January this year (on a 3-month moving average). The US has since dropped 3.7%, while the UK was down 5.7%.
Nevertheless, there are enough parallels to suggest that the outlook for UK interest rates will shift dramatically, if Mr Johnson gets a deal through. A willingness to consider Northern Ireland-specific solutions has fanned the (faint) possibility of a deal for Brexit. Mr Johnson can afford to ‘ditch’ the DUP if needed, as the leave wing of the Labour Party – led by Stephen Kinnock – can be expected to back a revised deal.
