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The rose on jobs report relief.
UK employment increased 238K in the three months to June, up from 134K previously and ahead of the consensus expectation for +185K. The country’s unemployment rate remained steady at 4.7%.
It would have taken a significant deterioration in the labour numbers to throw the Pound of course, meaning Tuesday’s relatively safe job report will keep the recent recovery intact.
The Pound to Euro exchange rate rose to 1.1570 from 1.1550 in the minutes following the release, the pound to Dollar exchange rate from 1.3423 to 1.3440.
Nevertheless, the labour market continues to ’soften’, with another more timely measure of employment conducted by the ONS, based on PAYE tax data, showing that in July there were 8,000 fewer people in payrolled employment than in June.
The decline in available jobs also continued, with the number of vacancies available falling by 44K (5.8%) on the quarter (May to July) to 718K.
“This continued softening of the labour market is a direct result of policies which are increasing the cost and risk of employing staff. The recent increase in Employer National Insurance Contributions, alongside employment law reforms and above-inflation increases to the National Living Wage, have substantially weakened the business case for hiring,” says Alex Hall-Chen, Principal Policy Advisor for Employment at the Institute of Directors.
Yet, wages continue to rise, with average earnings growing 4.6% year on year in the three months to June, slightly below 4.7% that was expected by a poll of economists.
When bonuses are excluded from the wage data, that figure rises to 5.0%, which meets estimates.
Above: showing initial post-release reaction.
The Bank of England cut interest rates last month on account of fears that the UK’s labour market was deteriorating.
However, it also signalled growing concerns over rising inflation, and economists say it looks as though the Bank will now place more emphasis on inflation numbers as opposed to the jobs market going forward.
This means that it required a significant deterioration in today’s labour market numbers to shift perceptions at the Bank of England. That did not happen, ensuring the market doesn’t see a higher likelihood of rate cuts in the coming months.
This will support UK bond yields, and the Pound.
An original version of this article can be viewed at Pound Sterling Live
