The number of people in employment unexpectedly jumped in the three months to November, as did wages excluding bonuses. Official data has given pound traders reason to cheer as the UK economy continues to hold up slightly better than expected.
Whilst the economy has notably slowed since the Brexit referendum, and inflation has jumped to 3%, job creation has remained firm. The number of people in work increased by 102,000 people in the three months to November, the biggest increase in the number of people being employed since the three months to July. This take the number of people employed in the UK to 32.2 million. Forecast had pointed to a 13,000 decline in the number of those starting work.
Meanwhile total pay excluding bonuses increased 2.4%, ahead of the 2.3% forecast and increase from the three months to October. This represents the biggest increase in wages since the three months to December 2016.
These figures prove that demand for workers is still strong, despite unemployment remaining at historically low levels of 4.3%. This is inline with BoE expectations that the recent steep fall in unemployment will begin to boost wage growth.
With inflation ticking lower, down from 3.1% in November to 3% in December and wages creeping northwards, pressure should be slowly easing for households. Whilst the change will be too small for consumers to feel on their purses right now, a few more months in this direction and the difference should be more noticeable.
The positive tone to the labour report pushed the pound to a fresh post Brexit high of $1.4118, a 1% gain on the day. The psychological level of $1.40 offered little resistance to the pair advancing and could now provide support when the next correction occurs.
The stronger pound continues to take its toll on the FTSE, which is down 0.2% on the day at 7710. A break below this level could indicate the start of another move lower, pulling 7685 into sight as the next downside target.
US points to strong start:
Looking across to the US open, equity indices are pointing to a positive start. Concerns over souring Sino-US relation are not impacting on US stock markets, instead showing itself in the dollar, keeping the greenback at 3-year lows. On the earnings front – Ford will be in the spotlight with earnings release due before the market opens. Ford is currently down 0.5% in pre-market trading.
StoneX Financial Ltd (trading as “City Index”) is an execution-only service provider. This material, whether or not it states any opinions, is for general information purposes only and it does not take into account your personal circumstances or objectives. This material has been prepared using the thoughts and opinions of the author and these may change. However, City Index does not plan to provide further updates to any material once published and it is not under any obligation to keep this material up to date. This material is short term in nature and may only relate to facts and circumstances existing at a specific time or day. Nothing in this material is (or should be considered to be) financial, investment, legal, tax or other advice and no reliance should be placed on it.
No opinion given in this material constitutes a recommendation by City Index or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person. The material has not been prepared in accordance with legal requirements designed to promote the independence of investment research. Although City Index is not specifically prevented from dealing before providing this material, City Index does not seek to take advantage of the material prior to its dissemination. This material is not intended for distribution to, or use by, any person in any country or jurisdiction where such distribution or use would be contrary to local law or regulation.