The official figures on the UK labour market are expected to show the jobless rate remained at 5.6% in the quarter to July, while jobless claims, a narrower and less distant gauge tracking labour market activity, is expected to have declined by 5,000 people between July and August, significantly down from a two-year average of 27,300. The UK's Office for National Statistics (ONS) is releasing jobs data on Wednesday morning.
A smaller number of people moving out of the jobseekers' allowance scheme partly suggests employment in the UK has been slowly approaching its sustainable maximum.
Commenting on the previous month's jobs report, ONS statistician David Freeman said that "… while it's too early to conclude that the jobs market is leveling off, these [June] figures certainly strengthen that possibility. Growth in pay, however, remains solid".
The quarterly index of regular average weekly earnings – those stripped of bonuses – is seen rising 2.9%, compared with 2.8% measured a month before. Despite wages picking up slowly, they remain notably below the pre-crisis levels. While regular earnings increased on average by 4% before the economic downturn, between 2001 and 2008, the same measure of pay rose just 1.6% on average between January 2009 and May 2015.
At the September MPC meeting, the BoE policymakers judged that "annual unit wage cost growth of around 1% in Q2 was some way short of what was likely to be needed to return CPI inflation sustainably to the 2% target".
"Wage growth had picked up over the past year, reflecting the past tightening in the labour market. However, the recent slowing in employment alongside steady output growth implied that productivity had risen, offsetting the effect of higher wage growth on unit wage costs," the policymakers explained.
The REC/KPMG Report on Jobs, published by Markit, also showed some cooling in the UK labour market. Permanent placements slowed to a 27-month low, while skill shortages persisted at a sharper rate in August, thus helping push starting salaries further upward.
"The UK jobs market is entering a new phase. Because of the scarcity of talent available, we expect that employment will continue to grow but at a slower speed than we have seen over the past two years. Likewise, unemployment is likely to slow its rate of descent as we move closer to full employment," REC chief executive Kevin Green commented on the August report.
The BoE's nine-strong MPC remained split 8 to 1 against the immediate rate hike in September. Ian McCafferty continued to vote for a rate increase as he saw "the outlook for private domestic demand growth was robust, with consumer and business confidence at high levels … adding to other signs that underlying inflationary pressures had begun to build".
BoE policymaker Martin Weale may again join McCafferty in October after saying last week, "The bank rate will need to rise relatively soon."
In his op-ed for the Scotland on Sunday newspaper, Weale argued the BoE should shrug off an increased level of uncertainty, and begin to raise the base interest rate sooner rather than later, with the possibility of policy reversal if the economic circumstances require such action.
Both policymakers were voting for a rate hike between August and December last year, before both dropped their vote in January this year, when inflation was falling sharply below the target. McCafferty returned to his rate-hike mode again this August and September, while Weale remained in wait-and-see mode.
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