The Bank of England will be looking out for any revisions to the number of people pushed out of work on Thursday when the Office for National Statistics (ONS) publishes fresh jobs data, with an interest rate decision set to hinge on the extent of the deterioration in the labour market. 

Last month, the official statistics body said the number of payrolled employees in May dropped by 109,000, an early estimate which was “subject to significant revisions”.  

It also revealed that the number of payrolled employees dropped by 55,000 between March and April this year, prompting concern among Bank of England officials that the labour market was weakening dramatically.

Governor Andrew Bailey has expressed his concern about extra “slack” in the labour market, suggesting the Bank was gearing up for more interest rate cuts than first thought. 

But leading economists at JP Morgan have suggested that any decision to cut interest rates at a faster pace will hinge on whether the ONS revises its employment data for the month of May. 

Analysts said the drop will likely be pared back from 109,000 to around 50,000. 

“If payrolls continue to show large and persistent declines the Monetary Policy Committee (MPC) would see this as a new development,” Allan Monks, UK economist at JP Morgan, said. 

“Further evidence of falling employment in next week’s official labour market report would be significant, and ultimately feed through into consumer confidence, income expectations and growth. We assume some stabilisation in jobs, but a decline would highlight the risk of a September MPC cut – we already assume August.”

Bank of England sceptical of ONS

The Bank of England has relied more heavily on business surveys and research supplied by jobs platforms and the Recruitment and Employment Confederation (REC) over fears ONS quality levels have dropped. 

The official statistics body is undergoing structural reforms in response to a recent review conducted by Sir Robert Devereux, with changes taking place within senior leadership.