UK Labor Figures Reaction

The ONS completed the release of jobs numbers from last month, with signs pointing to cooling while the unemployment rate remained unchanged.

A Full Set of Facts

The UK's ONS released its new "experimental" adjusted employment measure after delaying a couple of key data points for a week. The statistics office said that a failing response rate to its LFS survey prompted the need to change the methodology, which was initially slated to be updated starting next year. The adjustment to the figures is meant to increase the response rate but might not be directly compatible with the most recent job survey data. The changes would affect the unemployment rate but not the claimant count, which doesn't suffer from reporting issues.

The report showed that the unemployment rate remained unchanged at 4.2% in the rolling three months to August, according to the latest "experimental" data. The rate did increase 0.2% from the March-May period, which was the three months immediately preceding the current measure. The UK lost 82K jobs during the June-August period, which was the worst stretch of job losses since the start of 2021. Meanwhile, the claimant count was reported at 20.4K, below the 22.0K expected. The data supplemented the figures released last week, which showed that job vacancies fell for the 15th consecutive month, with the pace of wage increase slowing. However, it was also the first time wages grew faster than inflation, as the pace of consumer goods inflation has slowed.

What's Next for the BOE?

The pound was firmed up in the immediate aftermath of the mixed data to reach a two-week high, but it turned red, with losses adding up afterhour. The results fuel a continuing debate on monetary policy after the BOE effectively ended its rate-hiking campaign at the last meeting. The BOE will meet again on policy next week, with the consensus that there won't be any policy change.

The concern was that rising unemployment could push the country into a recession and force the BOE to cut rates. However, the mixed results suggest that despite softening in the labour market, the employment situation remains resilient enough that early rate cuts might not be necessary. The BOE last predicted that the unemployment rate would drift higher after all, but the data was slightly positive.

Pound Still in Uptrend

The pound remains impulsive despite the short-term drop and will remain biased upwardly while trading above $1.2192. Higher up, there lies swing support at $1.2232. If the trend remains intact within the ascending channel, breaking $1.23 could see prices extend towards the peak of $1.2313.

Source: SpreadEx

Key Takeaways

The UK's ONS released employment figures showing a cooling job market and an unchanged unemployment rate. The report indicated a 4.2% unemployment rate in the three months to August, with the highest job losses since early 2021. The data has sparked discussion about the BOE's monetary policy, with some worrying about a recession. Despite concerns, the employment situation remains resilient, suggesting that rate cuts may not be necessary.