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Analysts at Nomura explain that strong employment growth in the UK at the start of the year combined with weak GDP growth led to a fall in productivity in Q1 and a consequent rise in unit labour cost (ULC) growth – a key measure of domestic inflation.

Key Quotes

“Employment growth looks to have slowed in Q2, while GDP growth recovered, and these should reduce the pace of ULC growth. As for wages, base effects could slow the 3m annualised rate of regular private sector pay, while we see the headline annual rates broadly unchanged.”