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Prior 5.2%Employment change 25k vs 35k expectedPrior 84kAverage weekly earnings +3.8% vs +3.6% 3m/y expectedPrior +3.9%; revised to +4.1%Average weekly earnings (ex bonus) +3.6% vs +3.5% 3m/y expectedPrior +3.8%March payrolls change -11kPrior 20k; revised to -6kThe standout number is the one in the headline, which sees the jobless rate fall back to its lowest since August last year. It is a bit of an anomaly considering that payrolls data is continuing to decline further, with a negative revision to February as well. ONS continues to put out a caveat though that it is still experiencing data quality issues and advises caution in interpreting the survey numbers.The claimant count for March does show an increase from 17.1k (revised) in February to a provisional estimate of 26.8k, which likely will be revised further next month.The good news at least is that there continues to be some improvement in the Labour Force Survey (LFS) response rate. And that is enough to see ONS publish a bulletin update alongside the report today here.All in all, it’s a bit of a tough one to try and use this one statistical outlier of a data point to try and conclude much about the UK labour market outlook. But from the trend in payrolls data, one can argue that actual conditions are softening but on a gradual basis.As for wages data, we are seeing some cooling there with real wages also dipping further to the lowest in the three months to June 2023. But with cost-push inflation set to enter into the picture, that will keep the BOE on their toes in terms of balancing their policy outlook for the months ahead.
This article was written by Justin Low at investinglive.com.
💡 DMK Insight
The latest employment data shows a mixed bag, and here’s why that matters: the jobless rate is down, but payroll changes are concerning. With employment change at 25k versus the expected 35k, this signals potential weakness in job creation. The average weekly earnings are up 3.8%, slightly beating expectations, but the downward revision of March payrolls to -6k raises red flags. Traders should be cautious; these figures could lead to volatility in the forex market, particularly affecting USD pairs. If the trend continues, we might see a shift in Federal Reserve policy, impacting interest rates and subsequently the dollar’s strength. Watch for reactions in the equity markets as well, especially in sectors sensitive to consumer spending. The flip side? If earnings continue to rise, it could support consumer spending, providing a buffer against recession fears. Keep an eye on the upcoming economic indicators, particularly next month’s employment report, as it could confirm or refute this trend. A break below key support levels in USD pairs could signal a bearish trend, while a rebound might indicate resilience in the labor market.
📮 Takeaway
Monitor the upcoming employment report closely; a sustained drop in payrolls could trigger significant volatility in USD pairs and broader markets.
