UK Labour market comment on behalf of Michael Brown
Today's market analysis on behalf of Michael Brown Senior Research Strategist at Pepperstone
June 11, 2024 (Investorideas.com Newswire) This morning's mixed bag of a UK labour market report will likely come as another unwelcome surprise to policymakers on Threadneedle Street, with the Bank of England continuing to grapple with a too-hot pace of earnings growth, coupled with rising unemployment. The labour market continues to loosen, with data increasingly pointing to somewhat 'stagflationary' conditions.
Headline unemployment unexpectedly rose to 4.4% in the three months to April, equalling the highest rate since September 2021, albeit while concerns over the accuracy of the ONS' data persist. Meanwhile, on earnings, total pay rose 5.9% YoY during the same period, unchanged from an upwardly revised April figure, and continuing to represent a pace of earnings growth incompatible with a return to the BoE's 2% target. Nevertheless, it is worth nothing that a significant degree of said earnings growth likely came from April's minimum wage hike, which is also typically passed on by employers to other lower-paid workers, perhaps indicating less intense earnings pressures than the headline figure would imply.
In any case, it would seem that developments on the inflation front are likely to be of much more importance to policymakers when determining the timing of the first Bank Rate cut. On this front, the current pace of earnings growth is likely to keep services inflation at its current stubbornly high level, seeing the disinflationary path back towards the 2% target remain a bumpy one.
With this in mind, next Wednesday's UK inflation figures are likely to have a more significant longer-term impact on the policy outlook. Despite this, a rate cut as soon as next Thursday's MPC meeting appears unlikely, particularly taking into account the hotter-than-expected April inflation data, in addition to said meeting now coming in the middle of the general election campaign. August remains the most plausible timing for the first Bank Rate reduction to be delivered, however the vote for such a cut among MPC members is unlikely to be a unanimous one, and the pace of further easing beyond said meeting is likely to be relatively cautious, considering the upside inflation risks that persist within the UK economy.
More Info:
Disclaimer/Disclosure: Investorideas.com is a digital publisher of third party sourced news, articles and equity research as well as creates original content, including video, interviews and articles. Original content created by investorideas is protected by copyright laws other than syndication rights. Our site does not make recommendations for purchases or sale of stocks, services or products. Nothing on our sites should be construed as an offer or solicitation to buy or sell products or securities. All investing involves risk and possible losses. This site is currently compensated for news publication and distribution, social media and marketing, content creation and more. Disclosure is posted for each compensated news release, content published /created if required but otherwise the news was not compensated for and was published for the sole interest of our readers and followers. Contact management and IR of each company directly regarding specific questions.
More disclaimer info: https://www.investorideas.com/About/Disclaimer.asp Learn more about publishing your news release and our other news services on the Investorideas.com newswire https://www.investorideas.com/News-Upload/
Global investors must adhere to regulations of each country. Please read Investorideas.com privacy policy: https://www.investorideas.com/About/Private_Policy.asp