This morning’s UK jobs data painted a marginally softer-than-expected picture of the labour market, with unemployment unexpectedly rising 0.1pp in the three months to January, and earnings growth cooling both including, and excluding, bonuses.
However, data quality issues remain, particularly with the unemployment figures, likely limiting the extent of any significant impact of the figures on the monetary policy outlook; a factor supported by the MPC’s ongoing focus on services inflation as the primary determinant of when the first cut will be delivered.
Furthermore, it’s important to contextualise the report, in as much as modest labour market softening is what policymakers will be seeking to ensure elevated inflation does not become embedded within the economy.
The pound has found modest selling pressure, though the jobs figures are far from a game-changer, with focus now falling on the aforementioned inflation figures next week, due a day prior to the BoE’s next policy decision.
Leave a Comment