UK Real Earnings Shrink, British Pound Falls Back
- UK workers’ earnings after inflation contracted at the fastest rate since 2014 in the three months to April.
- GBPUSD fell back on the news, erasing earlier gains on hopes of a “soft” Brexit.
UK workers’ earnings after inflation fell at their fastest rate since 2014 in the three months to April, implying a squeeze on incomes and therefore on consumption and ultimately on economic growth. Yesterday, the UK inflation rate was reported at 2.9%.
Excluding bonuses, weekly earnings grew by just 1.7%, well below expectations of a 2.0% increase. Moreover, the previous figure was revised down to 1.8% from a previously reported 2.1%. According to the UK’s Office for National Statistics, which compiles the data, wages after inflation in the February-April quarter were down 0.4% year/year including bonuses and down 0.6% excluding bonuses.
In response to the latest figures, the Pound dropped back, losing earlier gains in London trading on hopes of a softer Brexit after last week’s inconclusive UK election result.
The unemployment rate held steady in the quarter at 4.6%, in line with forecasts, and remained at its lowest for more than 40 years. Jobless claims in May rose by a smaller than expected 7,300 but the number of people in work rose by a lower than expected 109,000.
--- Written by Martin Essex, Analyst and Editor
To contact Martin, email him at email@example.com
Follow Martin on Twitter @MartinSEssex
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