The Office for National Statistics (ONS) released their Labour Market statistics for the UK at 9:30am on Wednesday morning. The headline 3-month unemployment rate for February - April 2014 beat expectations, being released at 6.6%, below expectations of 6.7% and the previous release of 6.8%. The UK government will be very pleased with these figures, reinforcing their plan to bring the UK economy back on track, however the opposition is likely to focus on the wage growth. Average earnings growth for February – April was disappointing at 0.7% vs 1.9%, however this is overshadowed by the impressive job in unemployment.
UK employment is now at the highest on record, as the number of people employed is above pre-recession levels.
UK Jobless claims for May were -27,400, better than the expectations of -25,000.
Prior to the release sterling was trading at 1.6760 against the US Dollar. Following the release from the ONS, Sterling strengthened, trading up to 1.6785, on the strong numbers. The only concern is the growth in wages, however the drop in unemployment reduces the “spare capacity” in the economy that is focused on by the Bank of England, as a caveat to raise interest rates.