Incoming news remains mostly supportive of the view here that economic weakness is spreading to labour markets.
US non-farm payrolls undershot expectations in May but the series is volatile, arguing for smoothing data over several months. Three-month growth of a three-month moving average of private payrolls fell further to the bottom of the range of recent years, with weakness confirmed by aggregate hours worked – see first chart.
Today’s UK labour market report reported a fourth successive monthly decline in May in the stock of vacancies, which leads employees in employment. The employees series recovered in April but remained below a February peak – second chart*.
A rebound in annual growth of private sector regular pay to 3.8% in April partly reflected a base effect, with three-month growth of a three-month moving average subsiding further – third chart.
Last week’s news of a further fall in the Euroland unemployment rate from 7.7% to 7.6% in April was against the global trend of softer data. The decline was driven by a drop from 14.0% to 13.8% in Spain, while rates in Germany, France and Italy were unchanged – fourth chart. As previously noted, German registered unemployment rose in May, even after adjusting for a reporting change distortion, while vacancies fell for a second month.
*Both series are reported as three-month moving averages.