UK jobs data suggests ‘on-hold’ BoE for time being - ING

James Smith, a Developed Market economist at ING, says that, for the moment, he does not expect the Bank of England (BoE) to cut interest rates in the first half of 2020, but this will depend heavily on whether the jobs' market deteriorates further.

• "There are undoubtedly early signs of weakness. Vacancy levels have consistently dropped through 2019. The latest Markit/RECS jobs report points to another fall in permanent placements, while some other recent PMIs have anecdotally indicated that some staff are not being replaced and in some cases, they're being made redundant. 
• However, all of this is only partially reflected in the latest official figures. Jobs' growth grew by a modest, but positive, 24,000 in the three months to October. As we've seen in the past few readings, a lot of the weakness is concentrated in part-time and 18 to 24 year-old workers. This can be a fairly volatile part of the data and, once removed, the picture has been slightly less negative over recent months
• In short, it’s probably too early to make firm conclusions about where the jobs' market is headed. But it’s worth remembering that a lot of the current weakness is driven by persistently low investment, and today’s headlines on the potential non-extension of the Brexit transition period will only add to the uncertain business climate in 2020.
• Should we see unemployment begin to tick higher, then that would have negative implications for wage growth. Excluding bonuses, pay is growing at a healthy 3.5% annual rate, and this has been a key pillar of the Bank of England's hawkish rationale over recent years. 
• Admittedly policymakers are already pencilling in a modest fall in wage growth to around 2.5% during 2020. We tend to agree that we're unlikely to see a severe slowdown here, partly because wage gains over recent years have been amplified by other, structural factors. Demographics (high retirement rates relative to new joiners in certain sectors), as well as a noticeable fall in EU immigration, have played a role in driving skill shortages."