New government statistics show slower growth in employment and average earnings, according to the Chartered Institute of Personnel and Development (CIPD).
John Philpott, chief economist at the CIPD, said the figures show that the threat of inflationary pressure from the labour market is receding. This suggests that interest rates will peak at 4.75% and it increases the chances of a rate cut later this year.
Philpott said: “Although employment is still growing, the pace of job growth in the first quarter was much slower than in the second half of 2004. The level of unfilled vacancies has also fallen.
“And while the renewed fall of 15,000 in the Labour Force Survey measure of unemployment is welcome, this is almost exactly matched by a rise in the number of economically inactive people.
“Claimant unemployment, by contrast, has been rising consistently, albeit modestly, since the turn of the year,” he said.
“With the CIPD Labour Market Outlook and other forward-looking indicators point to falling confidence in several key sectors of the economy the likelihood is growing of a cut in interest rates sometime later this year.”
The Labour Force Survey showed:
- There are now 28.6 million people in work, up 183,000 on a year ago
- Unemployment has fallen 23,000 to 1.4 million
- The number claiming Jobseeker’s Allowance in April 2005 was 839,400, up 8,100 on the month but down 32,100 on the same month last year
- The number of people claiming incapacity benefits fell 22,000 in the year to November 2004, to 2.64 million.
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