Advertisement
Advertisement

UK Unemployment Rises to 3.9% as Wage Growth Slows; US CPI Report Looms

By:
Bob Mason
Published: Mar 12, 2024, 07:20 GMT+00:00

Key Points:

  • The UK unemployment rate rises to 3.9% in January.
  • Wage growth slows from 5.8% to 5.6%.
  • Later today, the US CPI Report will warrant investor attention.
UK Unemployment Rate

In this article:

Labor Market Overview, UK – March 2024

On Tuesday, the UK Labor Market Overview Report garnered investor interest. Wage growth, consumer spending, and inflation remained the focal points for the Bank of England.

Average earnings (inc. bonus) increased by 5.6% in the three months to January, year-over-year (3M/Yr). Economists forecast average earnings (inc. bonus) to rise by 5.7%. In December, average earnings (inc. bonus) advanced by 5.8% (3M/Yr).

The unemployment rate rose from 3.8% to 3.9%, while employment fell by 21k after a 72k increase in December. Economists forecast employment to rise by 10k and a 3.8% unemployment rate.

According to the Office for National Statistics,

  • The UK Claimant Count increased by 16,000 in February and by 85,800 over the year.
  • Job vacancies declined by 43,000 from December 2023 to February 2024. However, vacancies remained above pre-COVID-19 levels.

Bank of England Monetary Policy Implications

Despite the softer-than-expected wage growth figures, the BoE may consider wage growth elevated. Nonetheless, weaker labor market conditions could further impact wage growth that remained elevated in January.

On Monday, BoE Monetary Policy Committee member Catherine Mann warned inflation remained distant from the 2% target, saying,

“We’re nowhere near the historical relationship between services and goods that is consistent with the headline at 2%.”

Significantly, the labor market data could raise hopes of a BoE shift in monetary policy rhetoric.

GBP/USD Response to the UK Labor Market Data

Before the UK labor market report, the GBP/USD fell to a low of $1.27996 before reaching a high of $1.28233.

In response to the labor market figures, the GBP/USD rose to a high of $1.28185 before sliding to a low of $1.28008.

On Tuesday, the GBP/USD was down 0.05% to $1.28072.

GBP/USD reacts to UK Unemployment rate and wage growth figures.
120324 GBPUSD 3 Minute Chart

Up Next: The US CPI Report

Later today, the US CPI Report will warrant investor attention. Hotter-than-expected inflation figures could reduce bets on an H1 2024 Fed rate cut.

Economists forecast that the annual inflation rate will remain steady at 3.1%. However, economists expect the core inflation rate to ease from 3.9% to 3.7%.

Beyond the numbers, BoE MPC Member Catherine Mann is on the calendar to speak on Tuesday. Reaction to the UK Labor Market Overview Report and the timeline for a BoE rate cut could move the dial.

About the Author

Bob Masonauthor

With over 20 years of experience in the finance industry, Bob has been managing regional teams across Europe and Asia and focusing on analytics across both corporate and financial institutions. Currently he is covering developments relating to the financial markets, including currencies, commodities, alternative asset classes, and global equities.

Did you find this article useful?

Advertisement