Economics

UK labour market 'resilient despite Brexit'

BBC Radio 5 Live

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Yesterday official figures showed the lowest first quarter unemployment rate since late 1974at 3.8%.

Monique Wong, senior portfolio manager at Coutts, tells Wake Up to Money that the labour market is "very resilient in spite of Brexit".

"Earnings growth has eased a little bit from last month, but it is one number, and at 3.2% it's still a very solid number."

Those figures, plus stronger first quarter growth, tell us that "if it weren't for Brexit, the Bank of England would be thinking of raising interest rates," she adds.

PMIs not too surprising

teapot being poured
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Back to that PMI services data for the UK.

Thomas Pugh, UK economist at Capital Economics, reckons it is not too surprising that April's reading was slightly more upbeat because of the delay to Brexit.

He points out that the PMIs do not cover the retail sector and that retail sales volumes have been robust since the the start of the year.

"The upshot is that even though the PMI surveys are pointing to a weak Q1, followed by a slightly better start to Q2, we think that this is mainly due to concerns, and then relief, about Brexit. Instead the opposite probably happened. Activity in Q1 was boosted by stockbuilding and firms bringing forward purchases but this is likely to reverse and weigh on growth in Q2," he said.

So, he reckons that after the economy grew by 0.5% in the first quarter, growth will fall back to 0.2% in the second.

Data is due a week today.

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Bank 'may be tempted to raise rates before Brexit'

Today Programme

BBC Radio 4

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But might the Bank of England want to move rates later?

Interest rates are currently at 0.75%, and we're not expecting a change today.

But Simon French from Panmure Gordon says there is an "outlying risk" that with wages growing and employment at a near 40-year high and signs of inflation picking up, they "may be tempted" to raise rates before Brexit is due.

The Bank of England is going to announce its latest interest rate decision at noon London time.

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