Agenda: UK jobs and wages data in focus
Good morning, and welcome to our rolling coverage of the world economy, the financial markets, the eurozone and business.
Continuing evidence of Britain’s cost of living squeeze is expected today with the latest wages and jobs data.
Despiste inflation unexpectedly holding steady at 2.6% rather than rising further, cash strapped households are likely to find little relief in the wages figures. They are expected to continue lagging the cost of living, with analysts predicting that average weekly earnings grew by 1.8% year-on-year in the three months to June, the same figure as last time. Stripping out bonuses, the figure is expected to hold steady at 2%.
But Michael Hewson. chief market analyst at CMC Markets UK, says that wages growth has been on an upward trend:
The most recent wages numbers saw weekly earnings excluding bonuses for June come in at 2%, up from 1.7% in May, an encouraging sign that we may have seen wages start to show signs of a rebound at a time when ILO unemployment is at and expected to remain at a 42 year low of 4.5%.
With employment levels at record highs any signs of a tighter labour market could well offer the pound some significant support which means that a strong wages number today could offer the Bank of England that “goldilocks” scenario of falling inflation and rising wages and potentially move the debate back to the timing of a possible rate rise.
Ipek Ozkardeskaya, senior market analyst at London Capital Group, disagrees:
The divergence between the price and wages growth will likely continue weighing on the real wages and cool down the inflationary pressures as a consequence. Under these circumstances, the Bank of England will be in a position to keep the interest rates at the current historical low levels for an extended period of time and walk the UK businesses through challenging Brexit times.
The pound seems undecided too, edging down jkust 0.05% against a recently revived dollar at $1.2862.
Also coming up today are eurozone second quarter growth figures, expected to show an increase of 0.6%. This compares to a 0.3% rise in the UK in the second quarter.
The agenda:
- 9.00 BST: Italian second quarter GDP
- 9.30 BST: UK unemployment and wages data
- 10.00 BST: Eurozone second quarter GDP