HSBC UK Professional & Business Services Sector
According to their recent article, HSBC UK shares that the UK CPI inflation holds steady at 2% and the labour market is loosening.
Furthermore, headline CPI inflation was 2.0% in June y-o-y, unchanged from May but in line with the Bank of England’s target rate. The core rate – that excludes energy and food – and services inflation were both also unchanged at 3.5% and 5.7%, respectively. While there was some evidence of temporary ‘event’ driven pressures in hotel prices, services price inflation remained broad based and price momentum has been rising.
This perhaps stands to reason against a backdrop of still high wage growth at 5.7% 3m/yr in May and historically low unemployment rate 4.4%. However, the labour market has shown signs of gradual loosening, vacancies are 32% below their May 2022 peak and the number of people employed is 23% higher than its August 2022 trough.
For the Bank of England, pay growth is just about on track to meet their forecast of 5.1% 3m/yr in Q2 but the lack of further downward progress in services price inflation – their most important single indicator – will be cause for concern.
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