Top economist Howard Archer warns over labour market as economic pressures begin to bite
The UK labour market is expected to have lost momentum due to heightened domestic and global economic uncertainties, according to IHS chief economist Howard Archer.
The challenges, magnified by June’s referendum on UK membership of the European Union, include lacklustre UK economic activity early on in 2016, and the National Living Wage – a 50p hike to the minimum wage – which came into force on 1 April.
Employment is expected to have increased by 60,000 in the three months to February to stand at a new record high of 31.449m. The total number of jobs added though would be down from increases of 116,000 the three months to January, 205,000 in the three months to December and 267,000 in the three months to November.
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Labour numbers for March make up some of the economic data coming out this week. Wednesday’s labour market figures are followed by retail sales volumes and public sector finances on Thursday.
Archer is expecting retail sales volumes to have been flat in March, although this would still leave them up 4.6 per cent year-on-year.
“If retail sales were flat in March, they would still have seen robust overall growth of 1.5 per cent quarter-on-quarter in the first quarter. This would support hopes that consumer spending made a much-needed decent contribution to gross domestic product growth in the first quarter,” wrote Archer.
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IHS is predicting public finances to have seen year-on-year improvement in March, but “not enough to stop chancellor George Osborne from clearly missing the shortfall that was contained in March’s budget”.