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January 21, 2025
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UK Pay And Participation Are Rising

  • A renewed rise in the UK unemployment rate took it to 4.4% despite employment hitting record highs. Participation among older people has reversed much of its pandemic fall.
  • The underlying UR trend also increased, making this change look genuine. Nonetheless, the past two similar occasions proved extremes, with the UR falling a few months later.
  • Rapid pay growth might have encouraged labour force participation. The direct inflation effect should dominate the second-order slack story, but the BoE will probably cut.

By Philip Rush

January 16, 2025
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UK: GDP Scrapes Statistical Bottom

  • UK GDP disappointed the consensus again by only rebounding 0.1% m-o-m in November, continuing the stagnation since the election was called and risking a Q4 contraction.
  • The services PMI’s December upturn suggests the recovery could extend. That would also be consistent with residual seasonality, which has been closely followed in 2024.
  • Recent weakness will help the BoE cut again in February. Reversing this dynamic could make it the last, but we expect another in May before hikes return in 2026.

By Philip Rush

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