UK Jobs Data in Focus Ahead of BoE Decision
Article published on March 20th, 2025 3:15AM UK Time
The UK labour market report for the three months to January 2025 is set for release at 07:00 GMT on Thursday, providing a fresh look at employment conditions just hours before the Bank of England’s rate decision. While the data is unlikely to shift the BoE’s stance in the immediate term, it remains a crucial indicator of economic resilience, particularly as policymakers assess the balance between stubborn wage growth and cooling labour demand.
What to Expect from the Report
📌 Unemployment Rate: Expected to hold steady at 4.4%, though some analysts note the potential for a marginal round-up to 4.5%.
📌 Wage Growth (Ex-Bonus): Seen unchanged at 5.9% YoY (3M average), reinforcing concerns that pay pressures remain elevated.
📌 Vacancies & Payrolls: Pantheon Macroeconomics expects a 28K decline in payrolls for February, though they note this figure is likely to be revised higher over time.
The previous labour market report showed an acceleration in employment growth and wage growth holding firm, leading markets to view the jobs market as more resilient than anticipated. However, signs of softening vacancies suggest that hiring momentum may be slowing.
Policy & Market Implications
1️⃣ Limited Impact on Thursday’s BoE Decision
- The Bank of England is widely expected to hold rates at 4.5%, with policymakers remaining in data-dependent mode.
- Rate cut expectations are firmly priced for June, meaning this report will likely shape market expectations for later in the year rather than the immediate decision.
2️⃣ Stubborn Wage Growth Keeps BoE Cautious
- With services inflation still elevated at 5.0%, policymakers remain focused on labour costs feeding into persistent price pressures.
- If wages print above expectations, markets could push back on June rate cut pricing, providing support for GBP.
3️⃣ Signs of Labour Market Softness?
- A weaker-than-expected print, particularly in employment change or an unexpected uptick in unemployment, could increase rate cut expectations, reinforcing sterling downside risks.
- Investors will closely monitor payroll revisions and vacancies data for any evidence of cracks in labour demand.
Market Reaction: GBP Sensitivity to Jobs Data
A strong wage print could see markets scale back BoE rate cut bets, while any signs of labour market deterioration would likely reinforce expectations for an easing cycle from June onwards.
🔍 Final Thought: While the BoE is unlikely to react immediately, this report is another key input into their decision-making process. If labour market resilience persists, the central bank may need to remain patient before cutting rates—keeping GBP supported in the near term.