This month’s labor market figures continue to show signs of a gradual slowdown, with the number of job vacancies continuing to decline and unemployment rates rising. Earnings growth remains relatively strong although lower than a few months ago.
Short-term movements have varied across our different recruitment metrics. Recent months have seen declines in employment estimates from the Labour Force Survey (LFS) and increases in estimates of employees getting paid from HMRC’s real-time information (RTI) data.These different series measure slightly different concepts and cover different time periods, with potentially divergent trends for individual data points. In these cases, we recommend long-term comparisons that provide more stability..
Our annual growth rate comparisons dataset, which includes comparisons between HMRC RTI estimates and LFS estimates, identifies the annual growth rates of these metrics in recent periods and suggests that the medium-term trend of employment growth is weakening..
Latest Data
Estimates of employees getting paid in United Kingdom increased by 54,000 (0.2%) between April and May 2024, and increased by 265,000 (0.9%) between May 2023 and May 2024.
The early estimate for employees getting paid for June 2024 increased by 16,000 (0.1%) month-on-month and increased by 241,000 (0.8%) year-on-year to 30.4 million. The June 2024 estimate should be treated as an interim estimate and is likely to be revised upon receipt of more data next month..
The increased volatility in the LFS estimates, resulting from the small size of the samples achieved, means that estimates of quarterly change should be treated with additional caution. We recommend using them as part of our set of labor market indicators, along with workforce jobs, claimant number data, and real-time pay-by-income (PAYE) (RTI) estimates.
Factors affecting stock markets beyond unemployment
Stock markets are affected by a wide range of factors that go beyond the unemployment rate. Here are some of the key factors that can affect the stock markets:
Economic Indicators: Stock markets are sensitive to various economic indicators that provide insight into the health and growth prospects of the economy. These include GDP growth rate, inflation rate, interest rates, consumer spending, industrial production, housing market data, and business sentiment indicators. Positive economic indicators are often associated with increased corporate profits and can boost investor confidence, leading to higher stock prices.
Corporate Profits: The financial performance of companies, as shown in their earnings reports, plays an important role in stock market movements. When companies report better-than-expected earnings, it can lead to higher stock prices, while disappointing earnings can lead to declines. Investors closely monitor corporate profits, revenue growth, profit margins, and future guidance to assess the financial health and future prospects of companies.
Monetary policy: The actions and communications taken by central banks in relation to monetary policy can significantly affect stock markets. Interest rate decisions, quantitative easing programs, and statements by central bank officials can affect investor sentiment and market expectations. Accommodative monetary policy, such as low interest rates and liquidity injections, can stimulate borrowing, investment, and risk appetite, which can lead to higher stock prices. Conversely, tightening monetary policy can It has the opposite effect.
Sector- and company-specific factors: Stock markets are made up of different sectors and individual companies, each with its own dynamics and factors that affect its performance. Factors such as industry trends, technological advancements, regulatory changes, competitive landscape, mergers and acquisitions, management decisions, and product innovation can influence certain sectors or companies, driving their share prices independently of broader market trends.
The impact of consumer confidence on stock market performance
Changes in consumer confidence can have an impact on stock market performance. Consumer confidence refers to consumers’ feelings and perceptions regarding their current and future financial situation, employment opportunities, and general economic conditions. Here’s how changes in consumer confidence can affect stock markets:
Consumer spending: Consumer confidence plays a vital role in driving consumer spending, an important driver of economic growth. When consumer confidence is high, individuals are more likely to feel optimistic about their financial situation and future income prospects. These positive sentiments can lead to increased consumer spending on goods and services, which benefits businesses and potentially boosts corporate profits. Investors can view strong consumer spending positively, leading to increased demand for stocks and possibly leading to higher performance Stock market.
Company profits: Consumer confidence can affect the profits of companies, especially those that rely heavily on consumer spending, such as retailers, consumer goods manufacturers, and service providers. When consumer confidence is high, businesses may see an increase in sales, revenue, and profitability. This can positively affect investors’ perceptions about the company’s financial health and growth prospects, which can lead to higher stock prices.
Economic outlook: Changes in consumer confidence can provide insight into the overall economic outlook. If consumer confidence is rising, it could indicate a positive economic environment characterized by strong consumer spending, business expansion, and potential job creation. These positive economic outlook can boost investor sentiment and confidence in the stock markets, leading to increased buying activity and higher stock prices. Conversely, low consumer confidence may raise concerns about weakness. economic and weakens investor sentiment.
It is important to note that consumer confidence is just one of the many factors that affect stock market performance. Other factors, such as corporate profits, interest rates, geopolitical events, and macroeconomic indicators, also play important roles in shaping market dynamics.
