The pandemic is creating a two-tier labour market, next week’s numbers could show.
The Office for National Statistics (ONS) is likely to say on Tuesday that unemployment has risen to over 1.8m and that redundancies are still way above pre-pandemic levels, which points to further rises in coming months. The picture would be much worse but for the job retention scheme; migrant workers returning home; and some two million people who want jobs being recorded as inactive rather than unemployed.
Alongside this, however, wage growth is rising: it could hit 4 per cent, its highest rate since 2007 – albeit partly because of increased hours rather than higher hourly pay. Those who are keeping their jobs are therefore doing OK – although whether such increases can continue is doubtful.
These pay rises aren’t helping the high street, though, The CBI is likely to say next week that sales are sharply down on a year ago thanks to the lockdown.
Nor is it helping house prices. Nationwide might report that these have fallen for a second successive month. This would confirm economists’ belief that their rises last autumn were due to one-off factors that are now fading away – the release of pent-up demand after the lifting of the first lockdown and the stamp duty holiday.
In the eurozone, data might be mixed. Germany’s Ifo survey could show that firms’ expectations for future growth have receded since the autumn and the National Bank of Belgium’s survey could show that business confidence is still well below pre-pandemic levels. On the other hand, though, the ECB is likely to report that the M1 measure of the money stock has risen by around 16 per cent in the past 12 months, its fastest rate since 2006. In the past, such growth has been a good lead indicator of faster growth in output a few months later.
In the US, we could see small rises in both consumer confidence and durable goods orders, consistent with the economy growing steadily. The bigger news, however, could be that the house prices have risen by more than 10 per cent in the last 12 months, the biggest rise since 2014 – which suggests that low interest rates are stimulating the housing market well. This might, however, only confirm some economists’ suspicions that loose monetary policy does as much to inflate bubbles as it does to boost sustainable real economic activity.
