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mpc: 8 29 Leading indicators for the United Kingdom pointed to a slowdown in growth continuing into 2001. Since these indicators were built up from information which was already available to the Committee, such as equity prices, confidence measures and new car sales, some members were not inclined to put much weight on them: to do so ran the risk of double counting. For others, leading indicators could be used to improve the projections of most UK macroeconomic models, and had done so over a long period. Such indicators therefore provided a useful cross-check to the forecast.

The labour market

30 The latest quantities data suggested that the labour market remained tight, but might be turning. Growth in employment, as measured by the Labour Force Survey (LFS), had slowed steadily from 126,000 in the three months to May to under 70,000 in Q3. The underlying deceleration might be even greater: new population estimates had been used to gross up the latest data, and the effect was to increase measured employment in Q3 relative to earlier quarters. Claimant count unemployment had risen slightly in October, and while LFS unemployment had fallen by 36,000 in Q3 compared with Q2, it had risen compared with the three months to August. Overall labour input, as measured by total hours worked per week, was up only 0.1% on a year ago. Survey data, however, did not point to a major change in the demand for staff from employers. 31 There was little new information on pay settlements, and the Average Earnings Index continued to grow at not much above 4%, with regular pay (ie, excluding bonuses) growing at a similar rate. If anything, the rate of growth of regular pay appeared to have eased a little since May. 32 The Committee agreed that it would be important to monitor settlements in the new year closely to see how far, if at all, they began to reflect pressures on recruitment and retention and higher RPI (rather than RPIX) inflation. While a survey by Industrial Relations Services (IRS) suggested no sharp escalation in pay deals was likely over the next year, another by Incomes Data Services pointed to more upward pressure on settlements than for some time. The Bank's own survey, carried out by its regional Agents, suggested that 28% of employers expected settlements to be higher in 2001 than 2000, with 10% expecting them to be lower; the majority of respondents expected no change or had no company-wide settlement. The IRS survey pointed to a similar increase in the proportion of employers expecting higher settlements, but the average settlement was expected to