It's official UK Jobs Report day again, this month's data release from the Office for National Statistics mostly covering the period March to May 2017
The UK jobs market continues to outperform the wider economy with employment rising (up 175,000 to a record high rate of 74.9%) and unemployment falling (down 64,000 to a 42 year low rate of 4.5%) in the latest quarter, defying the background of slower GDP growth. May also saw a welcome pick-up in average regular weekly pay growth from 1.8% to 2.%. But what a buoyant labour market giveth, much higher price inflation has more than taketh away, with average real weekly wages falling by 0.5%.
For the time being therefore any negative effect of Brexit uncertainty on the UK workforce is coming indirectly via the higher prices people are facing in the shops rather than directly in terms of a dampening impact on job opportunities or pay packets. However, the longer the real wage squeeze continues the greater the risk that weaker demand for goods and services will feed through to weaker demand for labour and lead to lower business investment, thereby further reducing the prospect of a productivity led boost to real incomes.