UK DATA: Pay momentum is slowing - shown by both AWE and PAYE data (2/2)
Apr-15 07:33
- February's private regular AWE momentum (annualised 3m/3m) is now down to 4.50% (from 4.93% in January which was revised down from 5.88% and from the recent peak of 6.46% in December which was revised down from 7.50%). With the revisions this puts momentum at the lowest level since January 2024 and does change the recent narrative somewhat (albeit it also underlines how unreliable ONS labour market has been recently).
- We continue to prefer the HMRC PAYE pay data (although always take the "flash" latest month with a grain of salt). The March flash estimate is 4.63%Y/Y, with February revised up to 5.20%Y/Y from 4.92%Y/Y (the revisions to non-flash months aren't usually as large in this dataset).
- How should the MPC interpret this? In isolation of the rest of the labour market report, less wage pressures do make it a little easier for the MPC to ease policy down the line. But there's probably not enough "signal" in this data to isolate the noise seen recently and to change the narrative substantially.
- It does, however, mean that the signal from the AWE data is now more consistent with that seen in other survey data and in the PAYE data, in that wage momentum is notably slowing.
Want to read more?
Find more articles and bullets on these widgets:
Historical bullets
FED: March Economic Projections: Higher Inflation, Weaker Growth, Same Rates
Mar-14 21:28
The MNI Markets Team’s expectations for the updated Economic Projections in the March SEP are below.
- The unemployment rate is likely to rise slightly for 2025 alongside a downgrade in GDP growth, while the 2025 core and headline PCE inflation projections are set to rise again. Changes to later years will likely be limited, however.
- More detail on the shift in Fed funds rate medians is in our meeting preview - we will add more color next week.
FED: Market Pricing Nearly 3 2025 Cuts As Conditions Tighten
Mar-14 21:25
Amid rising government policy uncertainty, sentiment among businesses and consumers has fallen sharply since the start of the year, while equities and the dollar have reversed their post-election rise. Overall, financial conditions have tightened, even if stress is not yet mounting, e.g. no major widening of credit spreads (the accompanying chart shows the Fed’s financial conditions impulse index but only through January).
- Combined with growth fears, this has affected expectations for the Fed’s rate path, with around 18bp more cuts expected in 2025 compared with what was seen after the January FOMC. 65bp of cuts are priced for the year as a whole. 2025 cut pricing reached 71bp before the February inflation data and 76bp before the February payrolls report.
- A rate cut is seen with near zero probability for March’s meeting, but the first full cut is just about priced for June, with a second nearly priced by September.
- Chair Powell has no reason to endorse or refute these expectations – he’s likely to be happy with a press conference that ends with little discernable change in pricing.
CANADA'S CARNEY ANNOUNCES ELIMINATION OF THE CONSUMER CARBON TAX
Mar-14 21:17
- CANADA'S CARNEY ANNOUNCES ELIMINATION OF THE CONSUMER CARBON TAX
Related by topic
UK
