Closing post
Time to recap….
UK unemployment climbed and wage growth slowed in the three months to May, according to official figures that will pressure the Bank of England to cut interest rates next month.
Data from the Office for National Statistics, released on Thursday, showed that Britain’s official unemployment rate rose to 4.7% in the three months to May, up 0.1% from April to reach the highest level since June 2021.
Pay growth slipped from 5.3% to 5%, as forecast by City analysts. Unemployment had been expected to remain at 4.6%.
In the private sector, pay rises were 3.7% on average in May, a sharp fall from 4.3% in the three months to April.
The ONS director of economic statistics, Liz McKeown, said the labour market “continues to weaken”.
The jobs data showed that payrolls have fallen by 178,000 over the last year – a worrying decline, but less severe than expected after May’s payroll data was revised higher.
The chances of a UK interest rate cut in August pushed higher after the data was released, to over 77%.
The head of Germany’s Bundesbank has warned that the high import tariffs U.S. President Donald Trump currently plans to impose on European goods could push the German economy into recession.
Bundesbank President Joachim Nage also warned against interfering with the independence of central banks, following Donald Trump’s attacks on Federal Reserve Chair Jerome Powell.
Nagel says:
“Independence of central banks is the DNA of central banks. So I believe it is dangerous to play with the independence of a central bank.”
Elsewhere….
A “challenging” luxury market and retreat from gaming have prompted a fall in sales and profits at Mike Ashley’s Frasers.
Jaguar Land Rover has said it will axe up to 500 management jobs in the UK after reporting a plunge in sales linked to Donald Trump’s tariffs.
An HS2 subcontractor has been terminated from its role supplying labour to build a £100m “bat tunnel” following an investigation into allegations of overinflating rates for staff.
On the economic front, US jobless claims fell last week while retail sales across America rose faster than expected in June. This data makes an early US interest rate cut less likely, economists said.
And the amount of tax paid by current and former non-doms in the UK rose by 2% in 2023-24, new data shows.
ING say today’s US jobless claims, and retail sales, data suggest there is little need for an imminent rate cut.
James Knightley, chief international economist, US at ING, says:
Today’s US data is generally on the firmer side in terms of activity and jobs, while import prices are a touch softer than anticipated. Overall, it supports the view that there is little pressing need for another interest rate cut from the Federal Reserve.
