The UK labor market report once again reported job losses and a further rise in the unemployment rate. On the other hand, wage growth remained stable at high levels, with the data beating expectations. Nevertheless, the data was in line with BoE forecasts and therefore did not change anything for the market which continues to see a 50/50 probability for a rate cut in June. The central bank is now focusing more on the two inflation reports ahead of its monetary policy meeting.
The wage growth figures may have been distorted by the minimum wage increase in April. Overall, however, a slowdown in the labor market should lead to lower wage growth, as wages are lower than the unemployment rate. In summary, this report does not change anything for the BoE or the markets as the focus remains on the CPI figures ahead of the June meeting.
This article was written by Giuseppe Dellamotta on www.forexlive.com.
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