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UK unemployment is falling slightly faster than forecast and GDP growth is stronger than expected, the Bank of England’s Monetary Policy Committee concluded during a meeting held earlier this month, whose official minutes have only been published today.
According to the respective notes, the UK GDP growth in the second quarter reached a value of 0.7%, while surveys point to growth of around 1% a quarter in the second half of 2013. Overall, Bank staff estimated that growth in the second half of the year would remain around 0.7% a quarter or a little higher, stronger than expected at the time of the August Inflation Report.
The report issued by the Bank of England seems to point out that the recovery in growth since the end of 2012 reflects a dissipation of uncertainty against the backdrop of considerable monetary stimulus and easing credit conditions.
Additionally, it’s also interesting to point out that the LFS unemployment rate has decreased to around 7.7% in the three months to July, and a fall in the claimant count measure in August, together with surveys of companies’ employment intentions, had suggested that it would fall further over the rest of the year, probably at a faster pace.
Wages in the private sector also seem to be on a positive trend, with the twelve-month growth in private sector regular pay reaching 1.2% in the three months to July.
There were some signs that pay growth was picking up from its very low levels: shorter-term measures of pay growth were above the twelve-month measures, and the REC permanent salaries index had risen for the fourth successive month in September to its highest level since February 2008.
Some recovery in wage inflation was, however, to be expected as productivity growth recovered. In the second quarter, private sector hourly productivity had grown by 0.6%, the first rise in hourly productivity since 2011 Q2, and it looked likely to increase again in the third quarter.