The unreliability of Labour Force Survey (LFS) estimates has made the job of the BoE more challenging. But the ostensible weakness in the labour market has been exaggerated. The number of payrolled employees hit a record in July. Total workforce jobs in the UK jumped 298k in Q1, the largest quarterly increase in a year, to a record high too.
Real average weekly earnings grew 2.4% y/y in the three months to June (regular pay). Strong real wage growth continues to lift consumer sentiment: the GfK consumer confidence index has risen to the highest since September 2021. Total income tax receipts were up 6.7% y/y in the six months to July, corroborating the picture painted by payrolls and workforce jobs.
Alongside robust real wage growth, large accumulated ‘excess savings’ should provide an additional impetus to consumer spending over the coming months. The housing market outlook has brightened too, according to the latest RICS survey, with price and sales expectations (over the next 3 & 12 months) improving noticeably.
