Employment nowcast suggests limited impact from NICs rise

Our sentiment data-based nowcast, developed with Penta, suggests UK employment growth has continued to slow in recent months. But as yet, there is no evidence that last month’s increases in employers’ national insurance contributions and the national living wage have triggered large-scale job losses.

What you will learn:

• Our measure of labour market sentiment has stabilised at very low levels. The detailed results continue to suggest that firms are prioritising retention over recruitment, though encouragingly the score for expansion plans has progressively strengthened in the past six months.
• Our nowcast on pay suggests private sector regular pay growth will stabilise in Q2, rather than fall as the Bank of England anticipates.
• Given the Monetary Policy Committee puts a high weight on pay growth as an indicator of underlying inflation pressures, this is likely to reinforce the committee’s caution around the pace of interest rate cuts.