Two out of three ain't bad in the run up to BOE super Thursday

The services PMI was the big one this week and it joined manufacturing in posting a decent gain

We've had a broad look at the economy at the start of Q4 and it's not been a disappointing start. Construction was the bad boy in the pack but is still running at high expansion levels

The biggest stand out were the employment parts of the reports. Manufacturing employment grew strongly among large producers. Services rose at the fastest pace since May. Construction employment hit the fastest growth in a year.

Construction had been seeing a tightening in employment with a shortage in skilled workers, which was forcing costs up as demand for subcontractors rose. Markit noted that some firms had begun to take steps to reduce their reliance on subbies as their availability fell for the 28th month running. That's great news for employment as it means that those firms are more likely looking to take on new staff onto their books. Given the skills shortage that also means they are likely to invest in training schemes to improve their workers skillset. That in itself is a very positive sign. By and large subbies may cost more but are easier to let go if business dips for an extended period. Moving toward taking staff directly on to the books (and the associated costs and regulations with that) means that companies are confident about the future

The jobs market has been changing in recent months following very good growth. I've written previously that the labour market would come to a point where the balance shifts in favour of the employee from employer. We've seen that in the recent labour data and a report this week from job search firm Adzuna showed that vacancies outnumbered jobseekers in 41 of 56 UK cities in September

That's another big fat confirmation that the market is changing and why wages should continue to grow. As people can now be more choosy about jobs and wages, competition in the jobs market grows, also forcing up wages

What does it mean for the BOE?

The BOE will be happy that we've seen a return of growth across the economy this week but it's the employment news that will be most welcome. The fact that the labour market will get stronger, and wages should keep on rising will be key when they discuss rates on Thursday. There will still be plenty of caution among the MPC but this is the sort of news that ticks all the right boxes for rate hikes

I'm not saying they'll hike on the back of this data tomorrow but if the Fed are talking about hiking on the back of weaker wage gains then the BOE will have no excuse with far stronger numbers

I would have liked to have seen the next jobs report this week before the BOE, as that might have been the icing on the cake, but alas we have to wait until next week. Still, there's plenty of reasons here why we may see a more hawkish slant from Carney & Co tomorrow, both in the MPC statement and at the inflation report presser

Carney could be raising a glass to better employment tomorrow