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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About KPMG

KPMG LLP, a UK limited liability partnership, operates from 22 offices across the UK with approximately 15,300 partners and staff.  The UK firm recorded a revenue of £2.43 billion in the year ended 30 September 2021.

KPMG is a global organisation of independent professional services firms providing Audit, Legal, Tax and Advisory services. It operates in 145 countries and territories with more than 236,000 partners and employees working in member firms around the world. Each KPMG firm is a legally distinct and separate entity and describes itself as such. KPMG International Limited is a private English company limited by guarantee. KPMG International Limited and its related entities do not provide services to clients.

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