November’s 71,000 slump in the Labour Force Survey (LFS) measure of employment almost certainly overstates the weakness of the labour market. While we do not yet have the November data for the more reliable Survey of Employment, Payrolls and Hours (SEPH), the alternative ADP figures, which are well correlated with the SEPH, showed a 31,000 rise in employment in November. If that’s matched by the SEPH, it would keep the six-month average gain at a little over 20,000, rather than the very weak six-month average gain of 6,000 shown by the LFS. Although the LFS seems to have overstated the weakness of the labour market in November, we are likely to see a more genuine slowdown in employment growth across the different measures in the coming months. With employment growth slowing to a crawl, we expect the unemployment rate to drift up in the first half of 2020, but it should remain below 6.5%.
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