First Insights: UK: Mixed jobs report supports BoE hold this year

Research evidence excerpt

Global Markets Research

18 August 2026

First Insights

Economics - Global

UK: Mixed jobs report supports BoE hold this year

Research Analysts

European Economics

George Buckley - NIplc

The latest UK jobs report was mixed, with stronger private sector regular pay growth

but a higher unemployment rate than we and consensus were forecasting.

Payrolls fell by 13k m-o-m, continuing their downward trajectory. This was broadly in

line with our forecast, but weaker than consensus expectations of no change.

There was something for both doves and hawks on the MPC in today’s report, doing

little to challenge our view that the BoE will leave rates unchanged this year.

However, if the pick-up in private sector regular pay growth since the spring persists,

it will likely cause concern across the committee, as risks of second-round inflation

effects from the Iran war will be at the forefront of rate setters’ minds.

Josie Anderson - NIplc

Andrzej Szczepaniak - NIplc

This morning’s UK jobs report has a relatively mixed feel to it after an unequivocally

stronger report last month.

Earnings growth ticks up in Q2

On the upside, private sector regular pay rose by 0.4% m-o-m in June, though that is

within what might be considered a reasonable margin of error for an indicator that we

would like to see running somewhere between 0.2% and 0.25% m-o-m (which was where

it was on average in the two decades to 2019). Note that this measure of pay over the last

three months has averaged 0.3% m-o-m exactly, or 3.7% annualised. Over the last six

months it has been 2.6% annualised.

Fig. 1: A summary of today’s UK jobs report

Fig. 2: Some, but not all, measures of pay have strengthened

UK labour market indicators

Indicator

Metric

Freq

Prev

Latest

vs. Nomura

Private regular pay

% mom

Mthly

0.20

0.39

Stronger

Revisions (prev 6m)

Agg % mom Mthly

n/a

0.08

Little stronger

Mthly

-13

In line

Agg % mom Mthly

n/a

-8

In line

Mthly

147

83

Weaker

Stronger

Payrolls

Revisions (prev 6m)

mom

LFS employment

% qoq

Hours worked

% qoq

Mthly

1.1

1.6

Vacancies

% qoq

Mthly

-7

-6

In line

Unemp rate

Mthly

4.9

Weaker

Claimant count

mom

Mthly

-6

-11

In line

Redundancies

% rate

Mthly

3.6

In line

LFS wages

% qoq

Qtly

1.7

1.6

…