- UK wage growth hits a record high at 8.5% including bonuses
- Unemployment remains at 4.3% as the number of unemployed falls by 207,000
- Sterling traded lower after the release
The Bank of England may have little option but to raise rates again next week despite comments recently indicating the debate will be fairly balanced.
The UK labour market figures offer something for everyone on the face of it but under the circumstances, BoE hawks will likely be more emboldened by the figures than the doves.
Employment figures fell for a second month as the unemployment rate stayed at 4.3% which may be viewed as mildly encouraging to policymakers hoping to see more slack in the labour market. But much more progress will be needed if we’re going to see the vote swing in favour of a hold.
Especially when wage growth is continuing to rise, with average earnings not only rising to 8.5%, including bonuses but the June figure also being revised higher to 8.4%. I don’t see how the MPC can see that and even consider pausing on the whole and markets seem to agree, with a 25 basis point hike almost 80% priced in. What comes after that is harder to judge at this stage and will depend on how the data performs over the next two months.