UK Sees Record Job Creation But Inflation Squeezes Wages

• British employers hired a record number of staff last month and labour shortages deepened - increasing the chance that the Bank of England will raise interest rates again next month - but pay was squeezed by rapidly rising inflation. Tuesday’s data suggests the surge in cases of the Omicron variant of coronavirus in December did little to dent the resilience of Britain’s job market. 
• The figures are also unlikely to ease the BoE’s concern that a rising inflation tide will be slow to ebb. Concerns about possible labour shortages and pay pressures over the medium term was a major reason why the BoE raised interest rates last month for the first time since the start of the pandemic. 
• Financial markets see an 85% chance that the BoE will raise rates again on Feb. 3 after its next meeting, and 10-year government borrowing costs rose to a three-month high after the data release. 
• Employers added a record 184,000 staff to their payrolls in December, while the headline unemployment rate for the three months to November - which includes both self-employed and employed workers - dropped to 4.1%, its lowest since June 2020. That being said, some economists had doubts about the payrolls data, which often see big downward revisions. November’s record reading of 257,000 was revised to 162,000 new hires on Tuesday.

(Source: Reuters)