However, while the employment numbers were positive, most eyes were focused on the earnings growth numbers, which disappointed analysts, falling from 1.9% in the three months to January to 1.7% (if bonuses are included) in the three months to February – lower than the 1.8% predicted.
Ben Brettell, Senior Economist, Hargreaves Lansdown said: “The Bank of England has previously said that it wants to see a marked increase in pay before judging that sufficient labour market slack has been eroded for interest rates to rise. If pay growth continues to improve, this removes a key barrier to higher interest rates.
But he added: “In its February Quarterly Inflation Report the Bank raised its wage growth forecast for 2015 to 3.5%. This looks optimistic to me, and given the subdued outlook for inflation, I expect rates to remain at 0.5% well into 2016.
This is especially the case when viewed in light of the poor industrial data out the previous week.
We can hazard a guess that the UK economy is in better health than generally realised, even now. The public debate is still pessimistic: pundits focus, for example, on poor productivity (despite questionable data); on the sub-“trend” level of output (is a trend shaped by an unsustainable pre-crisis starting point very helpful?) and on the (misleading) level of (gross) debt.
They are probably missing the extent to which rapid job creation and lower oil prices are boosting disposable incomes, and the impact of a rising population on trend growth (properly defined). But whether all this matters at the polls is moot.
