Moody’s On UK Unemployment – Because, Not Despite


When even the leading economic forecasters get these sorts of things wrong we can see wy the noodle-necked in the lefty think tanks get confused:

U.K. joblessness held steady at 3.8% in the December quarter, in line with the consensus. But the details defied expectations; the number of employed people rose by a sharp 180,000, its strongest in two years, and helped push the employment rate to another record high of 76.5%. Adding to the good news, unemployment fell while inactivity plunged. On the wage front, however, the news wasn’t as rosy. Headline nominal pay growth fell to 2.9% y/y from 3.2%, while regular pay growth slowed to 3.2% from 3.4%.

Why do wages rise? Because people wish to employ more labour but there’s no more unused labour out there to employ. Thus it must be tempted from current employment by better offers.

So, if the extra desired labour can be tempted away from doing nothing then wages won’t rise even as employment does, right?

Leave a Reply

1 Comment threads
2 Thread replies
Most reacted comment
Hottest comment thread
2 Comment authors
bilbaoboyTim Worstall Recent comment authors
newest oldest most voted
Notify of

Tim, am I right in thinking that the wage growth is pretty good (compared to our ‘peers’ in the EU for example) especially as it is way above the rate of inflation? Also, is the greatest growth in the lowest wages? That would be a true leveller up, as is now the fashion to seek…