Bank of England Base rate & other news

[JustKeepSwimming]

Who do you count as public sector - people like teachers, social workers, police officers, prison officers, probation officers, or just desk-based workers like job centre bods?

All really. We have had shortages in many of those fields for decade plus, had no impact on salaries.

[Protagoras]

All really. We have had shortages in many of those fields for decade plus, had no impact on salaries.

The rate of UK unemployment rose to 4.2% in the three months to June (from 3.9% in the previous three months).

Isn't it a funny world where there are wage rises created by 'shortages' and yet also increased unemployment?

And we know that the unemployment figures don't capture actual unemployment rates. It's not as if contractors can sign up if on the bench for three months, for example.

Perhaps these figures tell us that in a general sense employers would rather pay more for pre-trained workers than obtain partially trained workers and add training.
(accepting that for some roles only fully trained workers are acceptable).

Important to remember though, that the powers that be seem to think that older workers should be doing 'gig' jobs, not being re-trained for higher value-added roles.

[JustKeepSwimming]

The rate of UK unemployment rose to 4.2% in the three months to June (from 3.9% in the previous three months).

Isn't it a funny world where there are wage rises created by 'shortages' and yet also increased unemployment?

And we know that the unemployment figures don't capture actual unemployment rates. It's not as if contractors can sign up if on the bench for three months, for example.

Perhaps these figures tell us that in a general sense employers would rather pay more for pre-trained workers than obtain partially trained workers and add training.
(accepting that for some roles only fully trained workers are acceptable).

Important to remember though, that the powers that be seem to think that older workers should be doing 'gig' jobs, not being re-trained for higher value-added roles.

Unemployment figures are based on the Labour Force Survey, it's a poll, it's not based on any government figures like benefits.

I don't think it's that funny, I think you have to zoom out a bit and see bigger picture.

[Martin@AS Financial]

An interesting speech from Catherine Mann who is a member of The Bank Of England Monetary Policy Committee.

"In my view, holding rates constant at the current level risks enabling further inflation persistence which will have to be unwound eventually with a worse trade-off. If we underestimate the rise in the persistent component of inflation and set policy consistent with a world that may no longer exist we will ourselves contribute to the persistent overshoot of the target. And the longer this overshoot is allowed to continue, the more likely a departure from the old ‘low inflation, low volatility’ steady state."

https://www.bankofengland.co.uk/-/me...ion-making.pdf

[northernladuk]

An interesting speech from Catherine Mann who is a member of The Bank Of England Monetary Policy Committee.

"In my view, holding rates constant at the current level risks enabling further inflation persistence which will have to be unwound eventually with a worse trade-off. If we underestimate the rise in the persistent component of inflation and set policy consistent with a world that may no longer exist we will ourselves contribute to the persistent overshoot of the target. And the longer this overshoot is allowed to continue, the more likely a departure from the old ‘low inflation, low volatility’ steady state."

https://www.bankofengland.co.uk/-/me...ion-making.pdf

I guess it would have been interesting if you could understand a word of that. Does this mean the price of my house will go up or down?

[Martin@AS Financial]

I guess it would have been interesting if you could understand a word of that. Does this mean the price of my house will go up or down?

It's a good question. According to the Nationwide Building Society House Price Index, house prices are now 5.3% below their August 2022 peak which represents an annual fall of £14,600 on a typical home.

This speech by Catherine Mann who has been described by Bloomberg at the most hawkish member of the Bank of England's rate setting panel appears to be moving in the opposite direction of Andrew Bailey who told lawmakers that the the BOE is "much nearer" to ending it's run of increases.

https://www.reuters.com/world/uk/unc...ey-2023-09-06/

[JustKeepSwimming]

I guess it would have been interesting if you could understand a word of that. Does this mean the price of my house will go up or down?

Its pretty clear. Bailey hinted that rates were peaking. Mann disagrees and thinks they must rise significantly higher because inflation isn't coming down fast enough.

Current rates + high inflation is far worse than higher rates + low inflation.

Mann has a traditional view. IR continue to rise, quickly, until inflation is down to 4-5% then are held until inflation is down to 2-3% and only then lower the rates. You overshoot rates rather than risk undershooting.

House values have fallen, significantly more than Nationwide data implies, as it relies on completions agreed many months ago. It made even more cloudy due to demand has dropped off a cliff (demand down 34%, supply is up 16% and transactions down 20%), so less data points. 5.3% year to August with 0.8% being in August, ie fall is gathering speed.

Perm staff demand is at 3 year low and falling, aka, job losses are coming. Putting further downward pressure on house values.

I'm genuinely struggling to see any data that suggests 1) we aren't in a recession, 2) the worst is very much in front of us and not behind.

[northernladuk]

Its pretty clear. Bailey hinted that rates were peaking. Mann disagrees and thinks they must rise significantly higher because inflation isn't coming down fast enough.

Current rates + high inflation is far worse than higher rates + low inflation.

Mann has a traditional view. IR continue to rise, quickly, until inflation is down to 4-5% then are held until inflation is down to 2-3% and only then lower the rates. You overshoot rates rather than risk undershooting.

House values have fallen, significantly more than Nationwide data implies, as it relies on completions agreed many months ago. It made even more cloudy due to demand has dropped off a cliff (demand down 34%, supply is up 16% and transactions down 20%), so less data points. 5.3% year to August with 0.8% being in August, ie fall is gathering speed.

Perm staff demand is at 3 year low and falling, aka, job losses are coming. Putting further downward pressure on house values.

I'm genuinely struggling to see any data that suggests 1) we aren't in a recession, 2) the worst is very much in front of us and not behind.

I was really after an answer something along the lines of Up or Down but I think I get it thank you

[jamesbrown]

Strong wage growth still, especially including bonuses. More pain to come.

[dsc]

Strong wage growth still, especially including bonuses. More pain to come.

Based on? I don't get how we can have very low perm demand, yet wages going up? surely it means it's an employer market and they wouldn't say yes to wage increases and would also be able to pay as little as possible and can pick and choose from whoever is looking.