Statistics body left embarrassed as error in labour data could affect interest rates
THE Office for National Statistics (ONS) has been left red-faced after it admitted an error when measuring labour market data, a miscalculation that could have implications for interest rates.
The statistics body admitted the blunder on Monday when it issued a correction in unit labour costs, which measure the cost of labour to employers for a unit of output.
New data reveals that annual unit labour costs rose 2.4% in the second quarter, up from the ONS’ initial figure of 1.6%.
The ONS said in a statement: “As announced on October 6, 2017, an error occurred in unit labour cost data. We have corrected this error in this release.
“This was due to income data from the second estimate of GDP being using instead of data from quarterly national accounts. You can see the original content in the superseded version. We apologise for any inconvenience.”
The error, which means labour costs exceeded productivity growth more than first thought, could be significant for policymakers at the Bank of England as it makes up one of several data points studied when setting interest rates.
Bank officials have signalled that they are preparing for an increase in interest rates this year in the face of rising inflation linked to the Brexit-induced collapse in the pound.
However, Fabrice Montagne, chief UK and senior European economist at Barclays, said: “While unit labour costs are now somewhat higher than previously, unit wages costs and productivity are unchanged meaning that the new series are based on new (higher) non-wages costs.”
Higher costs: Fabrice Montagne