ExchangeRates.org.uk - UK labour-market data was mixed with clear evidence of weaker demand offset by higher-than-expected wages growth. The Pound to Dollar (GBP/USD) exchange rate traded just below 1.2730 with the Pound to Euro (GBP/EUR) exchange rate at 1.1820 and just below 22-month highs just below 1.1850 recorded on Monday. The latest UK labour-market data recorded an increase in the unemployment rate to 4.4% compared with expectations of no change at 4.3% and the highest reading since October 2021. The data set also indicated that the number of people on payrolls declined by a further 3,000 for May after a revised 36,000 fall for April. Vacancies continued to decline, the 23rd successive retreat while the inactivity rate increased again. Headline average earnings increased 5.9% over the year, unchanged from a revised 5.9% the previous month and above consensus forecasts of 5.7%. Underlying earnings growth held at 6.0% and in line with market expectations. The data continues to indicate that the labour market is weakening, but the Bank of England (BoE) will still be uneasy over the rate of growth in earnings growth. The BoE will have to decide whether the overall labour-market data is consistent with a decline in inflation to the 2% target on a sustained basis. Key Quotes: Lloyds (LON:LLOY) Bank:
"UK monthly labour market data released this morning presented a picture of moderating activity but still relatively sticky wage growth. Whole economy regular pay growth (excluding bonus payments) was unchanged at 6.0% in the three months to April, slightly lower than both our and consensus forecasts for a slight rise to 6.1%. Private sector regular pay growth fell to 5.8% from 5.9%, continuing the decline since last year’s highs, although the Bank of England will be looking for further slowing." "The labour market quantities data should offer some hope that these pay pressures will eventually subside. The UK unemployment rate edged up to 4.4% from 4.3% as we expected, but it was above the median market forecast for no change. The level of employment fell by 139k in the latest three months." "The pound fell slightly in the immediate response to this morning’s UK labour market statistics. It also erased some of its gains versus the euro, with the latter weighed by perceived political risks after French President Macron called for new elections for the National Assembly. "
Barclays (LON:BARC) Research:
"UK employment data was marginally softer than expected this morning with weekly earnings printing at 6% 3M/YoY vs. expectations at 6.1%, whilst the unemployment rate was 4.4% vs. expectations of 4.3%. Whilst the data was slightly softer than expected Barclays Research continue to think that wage growth remains high vs. the BOE’s overall inflation target of 2%, and think the BOE will wait for further soft prints in the jobs data before they start pointing to a rate cut in August"This content was originally published on ExchangeRates.org.uk