Sterling Spikes as UK Unemployment Rate Surprisingly Drops in Q1
THE TAKEAWAY: UK unemployment rate drops to 8.2%, compared to expected 8.4% -> Higher jobs rate supports BoE stimulus decision -> Sterling shows mixed results
UK unemployment receded from a multiple-year high during Q1 2012, as the International Labour Organization’s Unemployment Rate dropped to 8.2%, defying expectations for the rate to move higher to 8.4%. On a smaller time frame, the Jobless Claims Change for April dropped by 13.7 thousand according to the Office of National Statistics, as opposed to the expected 5,000 claims jump that was expected by analysts.
The surprising drop in unemployment supports the BoE’s decision to not implement further stimulus during the bank’s May meeting, and shows that the UK economy could be stabilizing despite the onset of a technical recession during Q1. The good economic news also provides a boost for Prime Minister David Cameron, whose approval rating is at an all time low.
However, the good news could easily be overshadowed by a cut in the BoE’s growth expectation, which is set to be announced later today, as the European debt crisis puts pressure on the global economy.
The biggest employment gains for the quarter were made in the 25-34 age-group, where a .3% rise saw 3 thousand people go back to work. There also was a .3% rise among ages 50-64.
Cable climbed following the better than unemployment rate but gains were quickly erased. EUR/GBP fell following the release.
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