Stay informed of free updates
Just register at Using in the United Kingdom Myft Digest – Delivered directly in your reception box.
The British labor market was weakened in February and walked before the highest taxes on employers of this month, even if wage growth has remained solid, highlighting the challenge that the Banque of England faces while the economy is itself approaching for the impact of American tariffs.
Payroll employment fell 8,000 between January and February, according to tax data published Tuesday by the Office for National Statistics. The figure was revised from early estimates of a gain of 21,000.
The preliminary figures for March indicated a greater drop of 78,000, or 0.3% of those from employment to pay, before the introduction this month of national insurance contributions for higher employers in the October budget. The national decent salary also increased in April.
If it is confirmed, it would be the greatest fall since May 2020, although the preliminary figures of the ONS have been revised on average of 22,000 jobs each month.
The vacant posts fell below the pre-countryic levels for the first time since spring 2021.
The figures provide “some provisional evidence that companies have started to respond to the increases in commercial taxes and the minimum wage of this month by reducing the workforce,” said Ashley Webb, economist of the research company Capital Economics. “The growth of jobs could be more affected by the recent increase in uncertainty due to the chaotic tariff policy of the United States.”
The BOE looks closely at employment data to monitor the impact of the increase in employers’ tax and the increase in national decent salary. It also pays particular attention to the economic impact of American prices.
The “overview” of labor market data is that the central bank “has the green light to reduce the banking rate in May” by 4.5% now, said Sanjay Raja, economist of Deutsche Bank. “Commercial uncertainty remains rigid. And relaxation on the labor market emerges. “
British companies faced a strong uncertainty after the decision of American president Donald Trump on April 2 to impose import rates on the goods of most countries.
British exports are faced with an American import rate of 10%, disturbing the economic prospects. The financial markets tariff a very high probability of a drop in the BOE rate in May, with expectations of two other discounts by the end of the year.
Grant Fitzner, ONS chief economist, said that despite a great anticipation of the higher minimum wage, the higher nicke legislation and workers’ rights leading to a significant deterioration in the job market, “we really do not see this so far”.
Most of the labor market indicators, apart from income, have remained “quite soft”, he added, but there was “no sign in any of any type of marked turning point or deterioration”. The weakness of the labor market has not yet fueled lower wages growth, analysts noted.
Distinct data from ONS have shown that the annual growth in average weekly profits, excluding premiums, was 5.9% in the three months and February, against 5.8% in the three months and January. Economists had scheduled an increase of 6%.
Liz McKewn, director of production and analysis of economic statistics at the ONS, said that wage growth has accelerated in the public sector “as previous remuneration fully increases to our figures, while remuneration in the private sector has been little modified”.
The annual growth in regular regular profits was 5.9% for the private sector, unchanged from three months to January, and 5.7% for the public sector, against 5.2% in the previous period.
Webb said that downward pressure on inflation and activity of higher American prices “could mean that the Bank of England is starting to become less worried about rising risks of wage growth inflation and more worried about the risk of decline in activity.”
Adjusted for inflation, regular wage growth was 2.1% in three months to February, marking the 21st month of profits to inflation, in a boost to household finances.
The unemployment rate was 4.4% during the period, unchanged from three months to January. However, the figure is less reliable due to problems with the ONS workforce survey which underlies it.
The Statistics Agency aims to replace the survey with an improvement from the end of 2026.
