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Prior 5.0%Employment change -16k vs -67k expectedPrior -22kAverage weekly earnings +4.7% vs +4.4% 3m/y expectedPrior +4.8%; revised to +4.9%Average weekly earnings (ex bonus) +4.6% vs +4.5% 3m/y expectedPrior +4.6%; revised to +4.7%November payrolls change -38kPrior -32k; revised to -22kThe jobless rate in the UK continues to tick higher, with payrolls change for November also declining once more. That continues to reinforce a softening labour market picture, though wages are holding up somewhat still. The BOE will have to be mindful with the unemployment rate creeping up to its highest since February 2021. Meanwhile, the UK employment rate is seen dropping further to 74.9% – down 0.3% on the quarter and keeping well below its pre-pandemic levels.Real wages (after accounting for CPI) is seen declining but just marginally, with total pay seen at 0.7% and regular pay 0.5% in real-terms in the three months to September.As for payrolls in general, we are seeing the number of payrolled employees continuing to fall further and now reach its lowest since September 2023.The data continues to underscore that the UK jobs market is softening and will keep the pressure on the BOE to cut rates down the road. A 25 bps rate cut for this week is very likely, even if the voting intentions might be marginally in favour of a rate cut. The market is pricing in ~92% odds of a move on Thursday.
This article was written by Justin Low at investinglive.com.
💡 DMK Insight
UK’s job market is showing cracks, and here’s why that matters for traders: The recent employment data reveals a concerning trend with a payroll change of -38k, significantly worse than the expected -32k. This decline, coupled with a rising jobless rate, signals potential economic weakness that could impact consumer spending and overall market sentiment. For forex traders, this could mean increased volatility in GBP pairs, especially if the Bank of England reacts with dovish monetary policy. Keep an eye on the 1.25 level for GBP/USD; a break below could trigger further selling pressure. On the flip side, while the average weekly earnings rose to +4.7%, this may not be enough to offset the negative sentiment from rising unemployment. Traders should monitor the upcoming economic indicators closely, as any further deterioration could lead to a bearish outlook for the pound. Watch for the next employment report and any comments from the BoE, as these could provide critical insights into future market movements.
📮 Takeaway
Watch the 1.25 level on GBP/USD; a break below could signal further downside as UK job data worsens.
