British Pound Higher on Decade Low Unemployment, Wages Slowed
- The UK unemployment rate unexpectedly fell to 5.1%, lowest since 2006
- Core weekly earnings slowed to1.9%, above expectations
- British Pound rose versus other major currencies
The British Pound rose versus other major currencies after today's UK employment data. The Office for National Statistics reported that the unemployment rate dropped to 5.1% from September to November, below an unchanged 5.2% rate expected by economists. The figure marked the lowest rate since the three months leading to January 2006. The UK added 267K jobs, which was above the expectation for an addition of 235K jobs, raising the number of people employed to 31.4 million. The Jobless Claims figure also beat expectations and signaled a drop of -4.3K, which was better than the expected +2.8K addition. The prior reading was revised to -2.2K from the prior +3.9K. Somewhat offsetting to the otherwise positive report was a slowdown in wage growth in the last three months. Core average weekly earnings (which excludes bonuses) slowed to +1.9% in the last three months from the prior +2.0%, which was better than the +1.8% figure expected by economists. Average weekly earnings including bonuses slowed to +2.0% from the prior +2.4%, which was below the expected +2.1% reading.
This latest report suggest a positive picture with regards to the UK’s jobs market, yet it seems the missing part is still a pickup in wage growth. The BoE said recently that the recent decline in oil prices meant that the expected increase in inflation is set to be more gradual than forecasted in the Committee’s November Inflation Report projections. This may indicate it would require a pickup in wages to offset these effects, as was mentioned earlier today by DailyFX currency Strategist Ilya Spivak. In his latest speech, BoE Governor Mark Carney said that the recent pay figures signal that there is slack in the labor market, which means it is appropriate to maintain the benchmark rate at 0.5%. Yet with very positive figures on other fronts in the report, the British Pound rose versus other major currencies.
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