UK Unemployment Steady At 4.9%, Earnings Data Little Changed

The UK employment data, overall, was slightly stronger than expected, but is unlikely to have a significant impact on monetary policy.

The UK claimant count of unemployed workers recorded an increase of 700 for September, which was lower than the expected increase of 3,500, although there was a significant upward revision to the August figure to 7,100 from the 2,400 reported originally.

The unemployment rate held steady at 4.9% compared with a figure of 5.5% in September 2015, while there was an employment increase of 174,000 in the latest three-month period and a gain of over 550,000 from last year.

The headline increase in average earnings was in line with expectations at 2.3% from an upwardly-revised 2.4% the previous month, while the underlying increase in earnings, excluding bonuses was also at 2.3% from 2.1% previously.

The data will maintain expectations that there has been no significant immediate damage to the labour market from the EU referendum which will offer some relief.

The overall increase in average earnings has been very steady over the past few months with only a slight recovery from the lows seen in the second quarter. From the Bank of England’s perspective, the absence of any evidence of upward pressure on earnings will maintain their expectations that there is little immediate threat of upward pressure on inflation from capacity constraints and earnings.

There will, however, be some concerns over the risk of wage pressures as headline inflation rates increase. For now, the data will not discourage the bank from maintaining a very loose monetary policy.

Sterling edged higher on the data with GBP/USD moving back above the 1.2300 level as short covering remained the dominant influence. Gilts remained lower by 20 ticks on the day, but showed little reaction, while the FTSE index was slightly lower.


Tim is a contributing author to He is an economist and has been involved in financial markets for over 20 years as an analyst. He specialises in global economic trends, macro policy and central banks. Extensive knowledge, experience and data mining is used to anticipate trends in equities, bonds and forex with a contrarian slant. He is a graduate of the University of York with a degree in Economics/Econometrics.