TD Securities analysts report that the UK labour market is showing signs of further loosening, with the 3-month employment change falling into negative territory at -20,000, compared to market expectations of 14,000 and a prior figure of 52,000 [1]. The unemployment rate has increased to its COVID peak of 5.3%, slightly above both the market expectation and the previous reading of 5.2% [1]. Despite these softer labour conditions, wage growth remains elevated. Headline Average Weekly Earnings (AWE) are projected at 3.8% for the three months year-on-year, below the market expectation of 3.9% and the prior figure of 4.2% [1]. The ex-bonus measure is expected at 4.0% (matching market expectations but down from 4.2% previously), while private earnings ex-bonus wage growth is anticipated to rise to 3.5%, in line with market expectations and up from 3.4% previously, largely due to base effects [1].
This backdrop of weakening employment and rising unemployment has previously supported an easing bias from the Bank of England (BoE) [1]. However, TD Securities notes that in the near term, the Monetary Policy Committee (MPC) may shift its focus away from domestic labour data to assess the inflationary implications of Iran-related shocks [1].
No specific market reactions or analyst opinions regarding GBP/USD movements are provided in the article. The overall tone suggests that while the labour market is softening, persistent wage growth and external inflation risks may complicate the BoE's policy outlook [1].
CONCLUSION
UK labour data continues to soften, supporting the Bank of England's easing bias, but elevated wage growth and external inflation risks may influence near-term policy decisions. The market impact is medium, with attention likely to shift to geopolitical developments affecting inflation. Investors should monitor upcoming MPC assessments for further guidance.