The U.K. claimant count change figure indicated a larger than expected jump in unemployment at 50.4K for May versus the consensus of 10.2K reading and the previous 8.9K gain in joblessness.
Meanwhile, the unemployment rate ticked higher from 4.3% to 4.4% instead of holding steady, reaching its highest level since October 2021.
Still, the average earnings index showed stronger wage inflation at 5.9% for the three-month period ending in April, surpassing expectations of a 5.7% figure.
To top it off, the previous month’s reading was upgraded from the initially reported 5.7% increase to 5.9%, pointing to stronger price pressures.
Link to U.K. Labour Market Overview
Also, the number of job vacancies also fell, adding to signs that the labor market may be cooling. This marked almost two years of consecutive monthly declines in vacancies while the inactivity rate ticked higher.
Market Reactions
British Pound vs. Major Currencies: 5-min
Overlay of GBP vs. Major Currencies Chart by TradingView
Sterling had been cruising slightly higher leading up to the release of the U.K. jobs report, as traders might have been anticipating another potential upside surprise for May.
However, the U.K. currency took hits across the board when the report came in mixed. The significantly higher than expected claimant count change figure, along with the uptick in the jobless rate and decline in vacancies, likely outweighed the positive surprise in wage growth.
But while GBP briefly gave back some gains versus most of its forex peers, it was able to hold its ground against JPY. Soon enough, the British currency recouped its post-jobs report losses and gradually crawled back to positive territory versus its counterparts over the next few hours.