The latest U.K. employment report turned out mostly better than expected, as the economy lost only 8.9K jobs in April versus the estimated reduction of 13.9K.
In addition, previous readings enjoyed notable upgrades, reflecting resilience in the jobs market and strong wage inflation.
- April claimant count change: 8.9K (13.9K expected)
- March claimant count change positively revised from initial 10.9K in losses to a 2.4K gain in hiring
- Unemployment rate for March: 4.3% (4.3% expected, 4.2% previous)
- Average earnings index for three-month period ending in March: 5.7% (5.3% expected)
- Average earnings index for three-month period ending in February upgraded from 5.6% to 5.7%
Link to U.K. Labour Market Overview for April 2024
However, market participants appeared to zoom in on the decline in job vacancies, which suggested a cooling jobs market. Job opportunities are down by 26,000 between February and April, translating to a higher ratio of unemployed folks per job vacancy at 1.6 versus the 1.4 level in the previous quarter.
According to the ONS, “Although this ratio remains low by historical standards, it does demonstrate a slight easing in the labour market, with vacancies falling alongside rising unemployment.”
Market Reactions
British Pound vs. Major Currencies: 5-min
Overlay of GBP vs. Major Currencies: 5-min Chart by TradingView
Pound pairs were moving in tight ranges prior to the release of the jobs figures, before ticking slightly higher upon seeing the headline figures come in the green.
However, sterling didn’t make much headway against its peers before bearish pressure took over and dragged the currency lower across the board over the next couple of hours.
Dovish remarks from BOE MPC member Pill citing the possibility of a rate cut in the summer likely contributed to GBP losses, chalking up its steepest declines against the Kiwi and franc, as the latter chalked up a stronger than expected PPI figure.
Still, the pound was able to gradually recoup its losses as the session went on and traders likely adjusted positions ahead of the U.S. PPI report.
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