U.k. average earnings growth rises above expectations in January
Source: FxWire Pro - Commentary / 21 Mar 2018 15:02:49 Eastern Standard Time
Average earnings growth in the U.K. came in above predictions to a 28-month high of 2.8 percent in January, as private sector earnings growth reached 3 percent year-on-year and its three month-on-three-month rate, which currently appears to be the most significant indicator of inflationary pressures for the MPC, remained elevated above the 3 percent mark for the third consecutive month.
Total real weekly earnings in January on a three month-on-month basis came in flat, bringing to an end a nine-month run of declines. After nudging up to 4.4 percent in December, the jobless rate dropped back to 4.3 percent in January, a return to the joint-lowest rate since 1975, as employment rose by 168,000 in the three months to January.
The rise in employment has been widely based over the past year, with the largest rises seen in the healthcare and administrative sectors, while only education registered a decline. The figures also showed a rebound in total hours worked which, having fallen gradually in the second half of 2017, rebounded markedly in January implying that the improved productivity performance in the third quarter and fourth quarter of last year would not be sustained in the first quarter, noted Daiwa Capital Market Research in a report.
The only other weak spot in this release was a decline in vacancies for the first time in seven months. In the February Inflation Report, the Bank of England had concentrated on signs of growing wage pressures, and the continued momentum in the labor market is expected to add weight to that view.
“Accordingly, despite inflation surprising on the downside and concerns about softer economic growth in Q1, the MPC will likely keep open the option of a May Bank Rate rise in tomorrow's policy statement”, added Daiwa Capital Market Research.
At 18:00 GMT the FxWirePro's Hourly Strength Index of British Pound was slightly bullish at 67.8562, while the FxWirePro's Hourly Strength Index of US Dollar was neutral at -31.1231. For more details on FxWirePro's Currency Strength Index, visit http://www.fxwirepro.com/currencyindex
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