KPMG comments on today’s labour market figures
“Labour productivity takes another hit as the economy weakens” says Yael Selfin, Chief Economist at KPMG UK.
“Labour productivity takes another hit as the economy weakens” says Yael Selfin
“With cracks now starting to show in the wider economy, the relatively small drop in employment compared to GDP in Q3 has meant that output per worker fell for the second consecutive quarter, the first time since the Covid recession.
“It is only a matter of time before the recessionary environment spills into the labour market as employers increasingly consider the weakening demand and rising labour costs. While the vacancy rate will likely be one of the first indicators to turn, we expect the unemployment rate to eventually peak at around 6% by 2024.
“The continued growth in nominal pay could be sufficient to sway the Bank of England to raise the base rate again next month as it tries to prevent a wage-price spiral. However, the rise in nominal pay growth masks a drop in households’ purchasing power, as real pay growth was squashed by inflation for the tenth consecutive month.”
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