Jobs Market Stabilising: Pantheon Macroeconomics
- Written by: Gary Howes
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The UK reported a set of soft labour market statistics on Tuesday, but analysts at Pantheon Macroeconomics say there's reason for cautious optimism.
"Hard payroll data and most surveys now point to jobs stabilisation as Budget uncertainty that hit hiring last Autumn fades," says Robert Wood, Chief UK Economist at Pantheon Macroeconomics.
To be sure, the headlines made for disappointing reading:
The ONS reported the UK ILO unemployment rate rose to 5.2% in December, a five-year high, which disappointed against expectations for a stable reading of 5.1%. UK payrolls fell 11k.
Average earnings - including bonuses - fell from 4.7% to 4.2%, undershooting expectations for a drop to 4.6%. With bonuses excluded, pay fell from 4.5% to 4.2%, which met expectations.
However, Pantheon Macroeconomics has dug into the data and triangulated with other non-official surveys.
Here's a snapshot of an assessment made by Woods as the dust settles on Tuesday's report:
● The rise in the unemployment rate is still not fully reliable owing to adjustments in the ONS sample
● December's fall in payrolls was revised up to -6K from -43K
● The share of temporary workers unable to find a full-time job was steady at 23.7% in December, down from 25.0% in January
● Vacancies stabilised last year, with January’s 726K reading the same as in June 2025
● Google Trends searches suggest the redundancy rate has peaked at an unthreatening level
● Private-sector ex.-bonus pay rose by 7.5% month-to-month annualised in December, the strongest since April
Pantheon says the data should be enough to prompt the Bank of England to cut in March, but "the case for a further cut after March is less clear-cut."
