Jobs market stays resilient with unemployment at 3.8%
The unemployment rate dipped to 3.8% while wages accelerated, as the labour market continued to show little sign of slowing even against rising interest rates.
Unemployment had been expected to rise to 4.0%, but instead 250,000 more people were in work, meaning the number employed exceeded pre-pandemic levels.
ONS director of economic statistics Darren Morgan said: “With another rise in employment, the number of people in work overall has gone past its pre-pandemic level for the first time, setting a new record high, as have total hours worked.
“The biggest driver in recent jobs growth, meanwhile, is health and social care, followed by hospitality.
“While there has been another drop in the number of people neither working nor looking for work, which is now falling right across the age range, those outside the jobs market due to long-term sickness continues to rise, to a new record.
Pay, meanwhile, closed in on inflation with pay including bonuses up by 6.5% and pay without bonuses up 7.2%, both ahead of expected. While both were still below inflation, they were much closer than in past months.
“In cash terms, basic pay is now growing at its fastest since current records began, apart from the period when the figures were distorted by the pandemic,” Morgan said. “However, even so, wage rises continue to lag behind inflation.”
Nikkei and S&P 500 continue to rally, FTSE 100 struggles to keep up
Brent Crude futures are near $72 a barrel this morning after yesterday’s 4% slump on the back of the weakening global demand outlook.
The pressure meant the commodity-focused FTSE 100 index underperformed European markets by adding just 0.1% compared with 0.9% for the Frankfurt-based Dax.
Wall Street had another strong session yesterday as the S&P 500 index moved further into bull market territory by improving 0.9% to a one-year high, with the tech-focused Nasdaq Composite up another 1.5%.
The focus now turns to this afternoon’s US inflation reading for May, which economists expect will show a fall in the headline rate to 4.1% but with core prices still at a stubborn 5.3%.
The outcome will have a bearing on whether the Federal Reserve opts to pause interest rate hikes for the first time since the start of 2022 when the central bank announces its latest decision tomorrow evening.
This morning, policymakers in China took steps to bolster the country’s recovery by lowering the seven-day reverse repurchase rate by 10 basis points to 1.9% in the first reduction since last August.
The move brought a mixed response in Asia markets as the Shanghai Composite traded in negative territory but Tokyo’s Nikkei extended its recent progress to set another post-1990 high.
According to CMC Markets, the FTSE 100 index is expected to open 27 points higher at 7597 today.
