Dhingra Becomes Latest BOE Official to Attack UK Over Labor Data

(Bloomberg) -- Bank of England rate-setter Swati Dhingra blasted the UK’s statistics agency over its failure to produce accurate labor market data, saying that if India can with a population of more than 1 billion, Britain should be able to do so too.

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In the most stinging criticism of the Office for National Statistics yet, Dhingra said that it’s not “particularly plausible” that the UK struggles to produce trusted figures.

“I grew up in India. There are a billion people there. We managed to get the labor force survey answered,” Dhingra said at the BOE Watchers’ Conference in London Monday. “I don’t find it particularly plausible that that’s hard to do.”

Dhingra’s comments pile more pressure on the ONS, as it scrambles to boost response rates to its labor market survey and replace it with a “transformed” version.

Deficiencies in unemployment, employment and economic inactivity estimates have made it far more difficult to judge the strength of inflationary pressures coming from a tight labor market as officials decide how quickly to cut interest rates.

Dhingra said the problems “definitely constrain our ability to look ahead.” She highlighted “lagged” self-employment data that make it hard to know “what’s happening there.”

“The Indian labor force survey was modeled off, to a large degree, the UK labor force survey,” she said. “So somewhere we lost those skills and the will to do it as carefully as we did.”

Criticism of the ONS by BOE policymakers has become sharper in recent weeks, with Governor Andrew Bailey calling labor market statistics “integral” as they provide the only gauge on worker participation rates in the UK. Bloomberg reported last week that it could take until 2027 for a full transition to the new labor market survey.

Earlier on Monday, BOE Deputy Governor Clare Lombardelli said that Britain may have many more workers in its jobs market than official estimates suggest, potentially lessening an inactivity crisis policymakers are grappling with.

Her comments came after the Resolution Foundation said last week that the ONS may have underestimated the level of employment in the UK by almost 1 million people, an analysis that raised more questions about the reliability of official labor market data.

Lombardelli said at the same conference in London that the central bank’s analysis also suggested worker participation is much higher in the UK.

“We’ve done similar things, so we weren’t sort of surprised by their results,” she said. “It is possible that actually, it turns out participation is higher.”

The ONS could be in the firing line again on Tuesday when BOE Chief Economist Huw Pill testifies to a parliamentary hearing on inactivity in the labor market. Pill has already expressed frustrations over the quality of the data.

Dhingra, the BOE’s most dovish policymaker, also said that a large, targeted increase in tariffs by the US on China could lead to disinflation as Chinese products are redirected to other markets. World demand would take a “massive” hit and exporters would respond by cutting prices in a bid to maintain market share, she said.

Incoming President Donald Trump has threatened 20% tariffs on goods exported to the US, and 60% on Chinese goods.

Dhingra, a trade specialist, said the impact on prices of maximal tariff hikes would be “mostly in the downward direction.” Companies “might be able to absorb” tariffs of around 20%, which would not result in the trade diversion that would bear down on global prices, she added.

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