The data showed 200,000 extra people joined the workforce in the final quarter of 2022.
So if the number of vacancies continues to decline and the number of workers continues to rise, the implication would be that wage pressures would ease.
The unemployment rate rose, but remains below the 4.5 per cent level which the Bank of England defines as being “full employment.
Morrissey said: “The great 'unretirement' helped drive a record number of people back to work in the year to October-December. After an exodus from the workplace during the pandemic, more people are swapping the sofa for the office chair again."
She adds that the rising cost of living will be playing a part, as people are realising their pensions may not go as far as they had expected.
However, Morrissey adds: "We also know some of these people stopped work because of long term sickness, so better health may have encouraged them to reconsider a return to work.”
Inflation
On Wednesday February 15, the inflation data came in, which revealed a slight cooling in the headline CPI to 10.1 per cent.
This was down from a peak of 11.1 per cent in October, and is the lowest level for five months. That may mean the Bank of England feels less obligation to put interest rates up further. The market presently expects UK rates to peak at 4.5 per cent in this cycle, they are currently 4 per cent.
One economist casting a more positive light on the inflation data is Venetis.
In a note to clients he says: “The macromix is improving at the margin as inflation looks as though it is moving past its peak, and PMI (Purchasing Managers Index) surveys suggest negative growth momentum is abating.”
He added: “Goods disinflation should have further to run. This is the message from the leading indicators (e.g., import prices, PMIs); recent sterling appreciation; and ongoing pressure on manufacturers to reduce high inventories via price discounts.
"Services inflation is still pointing up, however, against the backdrop of an unusually tight labour market.”
Growth pains?
Samuel Tombs, chief UK economist at Pantheon, says the data is broadly in line with the Bank of England’s expectations and enhances the chances the bank will keep interest rates at the current 4 per cent when next it meets.
Tombs is also scathing of the significance of the UK’s narrowly avoiding recession at the end of 2022, when the final quarter was flat.
