Analyst Views: What do new labour market figures mean for the economy?

“Earnings growth may well pick up over the coming months, but the increase seems likely to be gradual as companies look to contain their costs in a still very competitive environment and still appreciable labour market slack limits workers’ ability to push for higher pay.

 

“The labour market looks set to improve further as we move towards the end of the year, perhaps at a pace that might continue to surprise policymakers. Surveys of recruitment agencies indicate that demand for staff appears to be surging as the economy gains faster than expected momentum.

 

“In our view, unemployment has peaked and should continue drifting down in the coming months. Having said that, with companies likely to have hoarded labour during the recession, we expect some payback in the form of weak private sector job creation and progress is likely to be slow.