This Great Graphic, composed on Bloomberg, shows the US (white) and UK (yellow) unemployment rates. In January, the US unemployment rate ticked up to 5.7% from 5.6%. The UK released December’s unemployment figures under the methodology of the International Labor Organization. The three-month average stood at 5.7%.
The unemployment rate in the US tends to be more volatile that in the UK. Before the crisis, the US unemployment rate fell below the UK rate, but then proceeded to rise well about it 2009-2010 period. The US unemployment rate peaked in late 2009, while UK’s lower peak took place in late 2011. However, in the last few years, the unemployment rates are falling nearly in lockstep. Further declines are expected in the coming months.
The earnings growth is not directly comparable. However, average weekly earnings in the UK in Q4 compared with Q4 13 were up 2.1%, but when bonuses are excluded the pace drops off to 1.7%. This is still the upper end of UK earnings over the past two years.
In the US average hourly earnings rose 2.2% year-over-year in January. They have gyrated in a 1.9%-2.2% over the past two years, with one exception in August 2013 (when earnings growth rose to 2.3%).
These earnings metrics are above the headline measures of inflation in both countries. This is a positive development for consumer demand. The earnings growth is also greater than productivity gains.This speaks to income disparity. Might it have peaked?
Read more by Marc on his site Marc to Market.