"Today’s data strengthens the case for the Bank of England to maintain its gradual approach to cutting interest rates. While the labour market continues to weaken, the more hawkish MPC members are likely to argue that there is no immediate sign of a significant deterioration in the labour market to warrant a faster pace of cuts. However, with the labour market likely to weaken further, it should create room for interest rate cuts in subsequent meetings.
“Unemployment remained unchanged in the three months to November, at 5.1%, but it is expected to rise over the coming months Forward looking survey evidence points to employers continuing to signal their intention to reduce hiring, with higher employment costs dampening labour demand. As a result, the unemployment rate could rise to 5.3% by the end of 2026.
“Wage growth eased to 4.5% in November, down from 4.6%. Headline pay growth continues to be pushed up by elevated pay in the public sector, however this is likely to change over the coming months, as last year’s generous settlements start to fall out of the annual comparisons. Private sector wage growth, which is more reflective of the weak labour market, continued to trend down, falling to 3.6%. We expect headline pay growth to fall to 3% by the end of this year.”
