U.K. jobs growth slows in three months to August

The U.K. labor market report that was released today had something for both those arguing for a rate rise and those who last month were not in the majority that saw the potential need for a rate hike in the near term, noted Daiwa Capital Markets Research.

The U.K. economic growth has seemed to stay weak and jobs growth decelerated in the three months to August, with employment rising 94k, around half the 181k pace witnessed in the earlier month, the smallest rise since February and much below expectations. This left the ILO jobless rate remained the same at the forty-two-year low of 4.3 percent.

Those data still imply that spare capacity continues to be used up and a high level of vacancies showed continued job growth in the near term. But the latest labor earnings figures implied that the labor market is not tight. Especially, excluding bonus payments, average wage growth stayed subdued at 2.1 percent year-on-year in nominal terms, leaving them down 0.4 percent year-on-year in real terms.

Thus, for policymakers, the fact that the labor market still seems to be tightening might encourage those pushing for a rate rise to vote for one in November. Overall, today’s data gave no particular clue on what outcome would be seen in November.

At 18:00 GMT the FxWirePro's Hourly Strength Index of British Pound was neutral at -41.4118, while the FxWirePro's Hourly Strength Index of US Dollar was bullish at 82.8556.1863. For more details on FxWirePro's Currency Strength Index, visit http://www.fxwirepro.com/currencyindex

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