On Tuesday, this week’s statistical flurry was kicked off by the monthly labour market and earnings data.
The headline in the data this week was the growth in average weekly earnings – for the first time in a long time, these statistics showed that wages are growing more quickly overall than inflation. Of course, when we dig under the totals, we can see that those in the private sector are growing more quickly than in the public sector, meaning that overall public sector wages are still falling in real terms.
On Wednesday, GDP statistics for the UK for July were released, showing that the economy contracted in July by 0.5%. Contractions were seen across all major sectors of the economy – production, construction and services. Construction activity was affected considerably by the weather in July – it was the wettest July since 2009 – and this also is likely to have knock-ons to other parts of the economy.
The biggest contributor, given its size in the economy, was services. Within this, we have seen significant effects on the economy of strikes in public services, mainly in health but also in education. This is interesting because we do not have the same level of industrial action in Scotland, particularly in health, so we may see quite a different story in the Scottish figures when they are published at the end of the month.
Next week – inflation and (perhaps) another rate rise?
August inflation data will be published next Wed (20th). It will be interesting to see what is happening to the overall rate, particularly given the increases we have seen recently in the prices of motor fuels. Other key indicators will be food inflation (will it continue to come down?) and core inflation (inflation excluding more volatile food and fuels).
All of these releases will feed into the view of the Bank of England’s Monetary Policy Committee next Thursday as they consider whether to continue or pause their rate-rising run. Wages rising higher than inflation and high and sustained core inflation may push them towards a rate rise, whereas the weakness in the economy may convince them to pause. We’ll find out next week…
A busy fortnight for us as well!
We’ve been busy here at the institute, producing new research on a number of topics. This week, we released an initial analysis of the disability employment gap, an exploration of the labour market data landscape for adults with learning disabilities in Scotland, and an analysis of the initial census results.
Next week, we will be releasing the next publication from our Serving the Future project, and a publication in partnership with the Joseph Rowntree Foundation, which considers the opportunities presented by the decarbonisation of the economy for low-paid workers – a section of the workforce that tends to get overlooked.
Of course, look out for our analysis of the Bank’s decision on Thursday!
Mairi is the Director of the Fraser of Allander Institute. Previously, she was the Deputy Chief Executive of the Scottish Fiscal Commission and the Head of National Accounts at the Scottish Government and has over a decade of experience working in different areas of statistics and analysis.
João is Deputy Director and Senior Knowledge Exchange Fellow at the Fraser of Allander Institute. Previously, he was a Senior Fiscal Analyst at the Office for Budget Responsibility, where he led on analysis of long-term sustainability of the UK's public finances and on the effect of economic developments and fiscal policy on the UK's medium-term outlook.